9781936420315 chapter 2 financial accounting and controlling

7/23/2019 9781936420315 Chapter 2 Financial Accounting and Controlling

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SAP ERP Financials Quick Reference Guide: SAP ECC 6.0

by Surya PadhiMercury Learning. (c) 2013. Copying Prohibited.

Reprinted for Maktar Shaik, Capgemini US LLC

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Chapter 2: Financial Accounting and Controlling

2.1 SAP ® FICO

SAP® FICO is also mentioned as SAP FI/CO, where FI stands for Financial Accounting and CO stands for Controlling , now referred to as

Management Accounting . There are two target groups that use accounting information:

1. External users: These users typically require information that conforms to legal requirements. This data is managed in the applicationcomponent FI. Groups that would fall under this category are the federal government, state governments, financial institutions, andinsurance providers.

2. Internal users: These users come from all levels within the company. They need information for the internal operations of the company.This information is contained in the application component CO.

The FI module is used to monitor and review the financial statements of a given entity. Financial reports used for external reporting purposes(such as balance sheets, profit and loss calculations, and cash flows) are created in FI. These external reporting requirements are based onthe varying legal requirements set by the relevant financial authorities, usually prescribed through general accounting standards such asGenerally Accepted Accounting Principles (GAAP) or International Accounting Standards (IAS). The FI module is called external accountingbecause it focuses on external reporting.

The application component CO contains all the functions for effective controlling of cost and revenue of an entity. CO covers all aspects ofmanagement. It is management oriented and management driven. It offers a broad spectrum of tools that can be used to compile informationfor the company management, which greatly exceeds that required by law.

Table 2.1 shows the differences between FI and CO modules.

The FI module comes with the following submodules. You will learn more about sub-modules later in this book.

The General Ledger (FI-G/L) records all relevant accounting transactions from a business point of view in the G/L accounts. In order to retain aclear overview, the G/L often contains collective postings. In such cases, the information posted is displayed in more detail in the subsidiaryledgers, which provide their information to the G/L in summarized form.

Accounts Payable (FI-AP) records all financial transactions with your vendor. This module often gets it data from procurement or MaterialsManagement (MM).

Accounts Receivable (FI-AR) records all financial transactions for dealings with customers. Much of its data is obtained from Sales and

Distribution.

Asset Accounting (FI-AA) records all accounting transactions relating to the management of assets starting from acquisition of assets to the

Table 2.1

FI CO

1. Reporting: Module generates reports

Financial statements such as balance sheets, income statement, and cash

flow statements.

Control reports such as cost center reports, profit center reports, and actual

and plan reports.

2. Modules: Covers following sub-modules

AA (Assets Accounting) CEL(Cost Element Accounting)

AP (Accounts Payable) CCA(Cost Center Accounting)

AR (Accounts Receivable) IO(Internal Order)

BL(Bank Ledger) ABC(Activity-Based Costing)

FM (Fund Management) PC(Product Costing)

GL (General Ledger Accounting) PA (Profitability Analysis)

LC (Legal Consolidation) PCA (Profit Center Accounting) In SAP® G/L, this submodule form is part of

FI.

SPL (Special Purpose Ledger)

TM (Travel Management)

3. Governing rules: Modules governed by International Accounting

standards

Country specific accounting rules such as US GAAP, UK GAAP, and India

GAAP.

No such rule. Driven by management.

4. Organization Entities: Modules include following SAP Organizationstructure.

–Company code –Controlling area

AP ERP Financials Quick Reference Guide: SAP ECC 6.0

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sale or scrap of an asset. This submodule interacts with FI-AP, FI-AR, and G/L of FI modules, as well as MM modules.

Travel Management (FI-TM) manages, calculates, and supports travel costs, travel planning, and travel expenses. This submodule is tightlyintegrated with SAP HR and FI-AP because employees in SAP are treated as vendors.

Bank Ledger (FI-BL) supports the posting of cash flow, cash payments, and cash receipts.

All transactions posted to G/L expenses and revenue account directly or indirectly flow to controlling. Similarly, when cross object transactionshappen between controlling objects, the system creates and FI posting. Figure 2.1 shows data flows between various submodules of FI.

Like FI, CO covers following submodules. However, we will cover those in more detail later in the book.

Cost and Revenue Element Accounting [CO-OM-CEL] is part of Overhead Cost Controlling. It provides classification of transaction items.These transactions are captured in various cost objects, such as a cost center or an internal order, depending on their cost or revenueelement.

Cost Center Accounting (CO-CCA) is used for cost collection and provides information about where costs are incurred in your organization.

An Internal Order (CO-IO) is another kind of cost object used for a wide variety of purposes to capture costs and, in some cases, revenueswithin a controlling area.

Figure 2.1: FI data flows. © Copyright 2012. SAP AG. All rights reserved.

Product Costing (CO-PC) takes care of all aspects of a product, from planning to tracking of costs. This submodule consists of following

components:

n Product Cost Planning (CO-PC-PCP)

n Cost Object Controlling

n Actual Costing

If you are looking for multidimensional reporting tool, then Profitability Analysis (CO-PA) is the best solution. Through profitability analysis youcan analyze market segments and profitability measures.

2.2 FI Enterprise Structure (SAP ® FI-ES)

For external reporting, enterprise generates various statutory or mandatory reports, which are further driven by country and business specificrequirements. As these reports are accessible to the public and refer to various segments of the user group, reports should be precise,

understandable, and should comply with legal requirements.

In order to have efficient reporting in the initial stage of SAP implementation, you must lay down a FI foundation that is called FI Enterprise



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Structure. In this section, we will deal with various forms of organization within this foundation, their meanings, and how you can best use them.

Source: http://help.sap.com/saphelp_46c/helpdata/en/b9/3e9d73417c11d189400000e8 29fbbd/content.htm

Figure 2.2: FI organization structure.

2.2.1 Client

n In mySAP™ ERP the client is the highest level of organization entity. When you are logging into the SAP system, you are entering as theclient. All data and specifications are created or configured at client level. This minimizes duplicate data entry and maintenance of data. In

an SAP server you can have multiple clients. Each one is an independent unit with separate master records and complete set of tables.

2.2.2 Company Code

n A company code is an independent balancing and legal entity from which you will generate balance sheets and income statements. All

financial statements are created at company code level, therefore company code is the minimum structure required in mySAP™ ERPFinancials. When a corporation is doing business in different countries, as per the country-specific law, entity needs to be registered inthat country. In SAP, this is called a company code. In SAP, you can create a new company code or edit company code by doing thefollowing:

¡ Transact ion Code : OX02

Or

¡ R/3 IMG Men u : IMG → Enterprise Structure→Financial Accounting→ Edit, Copy, Delete, Check Company Code→ Edit

Company Code Data

Or

¡ mySA P ERP IMG Menu : IMG→ Enterprise Structure→Financial Accounting→ Edit, Copy, Delete, Check Company Code→

Edit Company Code Data

1 Question – 1

Name the organizational entities for which the profit and loss statement and balance sheet can be generated .

A. Company code

B. Profit center

C. Internal order

D. Cost center and profit center

?



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http://help.sap.com/saphelp_46c/helpdata/en/b9/3e9d73417c11d189400000e829fbbd/content.htm



Answers

2.2.3 Business Area

n Business area in SAP refers to a separate organizational unit meant for internal purposes that can be used across company codes withina client. If business areas balance sheet is active in transaction code OBY6 (menu path IMG→ Financial Accounting→ Financial

Accounting Global Settings → Company Code → Enter Global Parameters), you can generate business area-wide balance sheet. Touse business area, you first need to create a set of business areas that you are going to use. You can create by following either:

¡ Transact ion Code : SPRO

Or

¡ R/3 IMG Men u : IMG→ Enterprise Structure→Financial Accounting→ Edit, Copy, Delete, Check Company Code→ Edit

Company Code Data

Or

¡ mySA P ERP IMG Menu : IMG→ Enterprise Structure→ Financial Accounting→ Edit, Copy, Delete, Check Company Code→

Edit Company Code Data

Figure 2.3: OBY6 company code global setting.

Answers

1 A,B

2 Question – 2

Business area is a legal entity for which you need to generate financial statements:

1. True

2. False

?

2 True



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2.2.4 Fiscal Year

n Fiscal year (also known as financial year or accounting year) is a set of periods used to calculate legal entities' financial reports, such asbalance sheet, income statement, and cash flow statement. The fiscal year of an entity does not coincide with calendar year. Figure 2.4 shows some of the commonly used fiscal years in various countries.

Figure 2.4: Country and fiscal year.

n In SAP, you will define fiscal year as a variant called fiscal year variant (FYV), which contains the definition of normal and special postingperiod. SAP comes with a few pre-delivered fiscal year, however, you can create your own fiscal year by doing the following:

¡ Transact ion Code : OB29

Or

¡ R/3 IMG Men u : Implementation Guide (IMG) → Financial Accounting→ Financial Accounting Global Settings → Fiscal year→

Maintain Fiscal Year Variant (Maintain short end Fisc. year)

Or

¡ mySA P ERP IMG Menu : Implementation Guide (IMG) → Financial Accounting (New) → Financial Accounting Global Settings

(New)→ Ledgers→ Fiscal Year and Posting Periods → Maintain Fiscal Year Variant (Maintain short end Fisc. year)

Figure 2.5: OB29 fiscal year variant.

n In total you can define 16 posting periods (12 normal posting periods, 4 special posting periods).

¡ Normal Posting Period



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¡ Special Posting Period

n The system derives the posting period from the posting date. If the posting date is within the last normal period, you can post thetransactions in one of the special periods.

n A fiscal year can be defined as a calendar fiscal year or as a non-calendar fiscal year.

n If the fiscal year's normal posting periods are the same months of the calendar year, then fiscal year is called calendar year . In otherwords, if the fiscal year is defined as the calendar year, the posting periods are equal to the months of the year. For example, in the

standard SAP system K4 is a calendar fiscal year.

n For calendar year, you need to check the indicator "Calendar year" against the fiscal. This ensures that you do not need to maintainadditional parameters of fiscal year.

n If each fiscal year of a fiscal year variant has the same number of posting periods and always starts and ends on the same day of the year,

then the fiscal year is an independent fiscal year . Otherwise, the fiscal year is designated as year dependent .

n All calendar fiscal years are year independent; however non-calendar fiscal years may or may not year dependent.

n In case of a non-calendar fiscal year, you can define the start and end of posting periods by assigning end dates to each period.

n You can define a year dependent period year by checking "Year-dependent" against the designated fiscal year.

n If one fiscal year is less than 12 normal postings, that fiscal year is called shorten fiscal year . A shorten fiscal year is always yeardependent and followed or succeeded by a complete fiscal year. When you want to close your account before or after completion of fiscalyear, that fiscal year would be called shorten fiscal year.

Case Study 2.1Company B acquires Company A. Company B follows calendar year as fiscal year, while Company A follows April –March fiscal year.In order to facilitate smooth consolidation, Company B directs Company A to follow calendar fiscal year. In this situation, Company Awill end its accounting year in December 2011 instead of March 2011. In this case, Company A prepares its financial statement after 9

months.

n Since fiscal year is a variant, you need to assign fiscal year variant to company codes. You can assign only one fiscal year variant to eachcompany, however, a fiscal year variant can be assigned to more than one company code. You can assign a fiscal year variant tocompany code by using the following:

¡ Transact ion Code : OBBP

Or

¡ R/3 IMG Men u : Implementation Guide (IMG) → Financial Accounting→ Financial Accounting Global Settings → Document→

Fiscal Year→ Assign Company Code to a Fiscal Year Variant

Or


(New)→ Ledgers→ Fiscal Year and Posting Periods → Posting Periods → Assign Variants to Company Code

2.2.5 Posting Period

n Posting periods are defined in the fiscal year variants as Posting Period Variant (PPV) and used to differentiate business transactionfrom one period to the next.

n You can open and close posting period in order to prevent an unintended entry by the user group. Normally, the current posting period willbe open at a particular point of time. At the end of each month, current and previous posting are open for posting.

n You can control open and close posting period with the combination of an account number range and account types.

n Similar to fiscal year, variant posting period variant is created at client level. You can assign posting period variant to any number company

code in a client.

n If one posting period variant is assigned to more than one company code, you can control the opening and closing of posting periodssimultaneously. This is suitable for centralizing the closing at the end of the month.



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Figure 2.6: OB52 open close posting period.

n Figure 2.6 shows attributes of posting period variant 1,000. While posting an FI transaction, whether it is originated in FI or other modules,system checks posting period variant at at document header level and at line item level.

n Document level check: Document header level check is the first level check initiated by the system with posting period and fiscal yearassigned to posting period variant. Document level check does not check account types and account number ranges. Ensure that thedocument level check account type field is masked by "+." The posting period variant must contain at least one account type with "+"symbol.

n Every FI posting first passes through document level check to reach the second level check. At the second level check, line items arechecked against account number range maintained in the "From account" and "To account" range, as well as against the fiscal year andposting period range.

n Second level check, or line item level check, is optional.

n You can authorize a specific group of person for posting to a particular posting period by assigning authorization group to the periodinterval(s) and user(s).

n Creation, maintenance of posting period, and its assignment to company code involves three steps:

¡ Define variants for open posting periods

¡ Open and close posting periods

¡ Assign variants to company code

n You can carry out these steps through:

¡ Transact ion Code :…‥

……Define Variants for Open Posting Periods – OBBO

……‥Open and Close Posting Periods – OB52

……‥ Assign Variants to Company Code – OBBP

Or

¡ R/3 IMG Men u : Implementation Guide (IMG) → Financial Accounting→ Financial Accounting Global Settings → Document→

Posting Periods→

…‥Define Variants for Open Posting Periods

…‥Open and Close Posting Periods

…‥ Assign variants to company code

Or


(New)→ Ledgers→ Fiscal Year and Posting Periods → Posting Periods →

……Define Variants for Open Posting Periods

……

Assign Variants to Company Code

……‥Open and Close Posting Periods



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n When entering a document you are entering a posting date. The posting date determines posting period and fiscal year.

2.2.6 Currency

n While creating company code, you need to define currency code for the company code. This currency is called company code currency or

local currency in SAP, and all other currencies are interpreted as foreign currency . While entering a transaction, the system defaultscurrency code from the relevant company code. You can override the system default currency code by entering another currency (called as

a document currency ) and then the system translates the amount posted in foreign currency into company code currency.

n To translate transactions from foreign currencies into local currencies, the system uses currency translation rates. You can maintaincurrency transaction rates between currencies by following either of the following paths for exchange rate types:


Or

¡ R/3 IMG Men u : Implementation Guide (IMG) → SAP NetWeaver→ General Settings → Currencies→ Enter exchange rates

Or

¡ mySA P ERP IMG Menu : Implementation Guide (IMG) → SAP NetWeaver→ General Settings → Currencies→ Enter exchange

rates

n

Through exchange rate types, you can maintain different exchange rates for the same set of currencies.n In SAP, exchanges rates are used for various purposes such as valuation of foreign currency transactions, translation of foreign currency

transaction into local currencies, and planning.

n You can maintain relationships between currencies daily, monthly, and yearly. As maintenance of exchange rates is normal businesspractice, SAP has provided various tools in order to facilitate user communities. The tools include inversion, base currency, and exchangerate spread.

For each type of exchange rate, you can use any one of the methods listed previously. However, you can also use different conversion tools fordifferent exchange rate types.

n Besides the previously mentioned maintenance tools, SAP has provided:

¡ Program RFTBFF00 to import flat file directly into system.

¡ Program RFTBDF07 and RFTBDF14 can be used with help of RFC (Remote Function Call) to transfer real-time data from externalsystem into SAP.

n Base Currency: If you are adopting this tool, then you need to assign base currency to a exchange rate type, and then maintain thisexchange rate between all other currency and base currency. The system will automatically calculate translation base currency and anothercurrency.

n Exchange Rate Spread : Exchange rate spread is a link between the buying/selling rate and the average rate of two currencies. If youmaintain exchange rate spread for exchange rate type, then you need to only maintain the average rate. Based on exchange rate, aspread system will calculate the buying/selling rate by adding and subtracting exchange rate spread to and from the average rate.


Or

¡ R/3 IMG Men u : Implementation Guide (IMG) → SAP NetWeaver→ General Settings → Currencies→ Maintain Exchange Rate

Spreads

Or

¡ mySA P ERP IMG Menu : Implementation Guide (IMG) → SAP NetWeaver→ General Settings → Currencies→ Maintain

Exchange Rate Spreads

n You can maintain exchange rates between two currencies through either direct quotation or indirect quotation, depending on businesspractice and market standards.

n In the case of direct quotation, one unit of foreign currency is quoted for the local currency, whereas in the case of indirect quotation, oneunit of local currency is quoted for the foreign currency. For example, company code currency is USD and foreign currency is INR. Whenyou are expressing the exchange rate between INR and USD it is called direct quotation. For example, 1 INR=0.02 USD. On the otherhand, when you are expressing the exchange rate between USD and INR it is called indirect quotation. For example, 1 USD=45 INR.


Or



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¡ R/3 IMG Men u : Implementation Guide (IMG) → SAP NetWeaver→ General Settings → Currencies→ Enter Prefixes for

Direct/Indirect Quotation Exchange Rates

Or

¡ mySA P ERP IMG Menu : Implementation Guide (IMG) → SAP NetWeaver→ General Settings → Currencies→ Enter Prefixes for

Direct/Indirect Quotation Exchange Rates

Answers

Answers

Answers

Answers

2.3 General Ledger (SAP ® FI G/L)

3 Question – 3

Exchange rate types distinguish the exchanges to be considered for various purposes such as valuation, transaction,

conversion, planning, etc .

1. True

2. False

?

3 True

4 Question – 4

The currency key you entered in the document header is for

A. The whole document

B. Each line item

C. A group of line items

D. None of the above

?

4 A

5 Question – 5

The local currency of a transaction

A. Can be entered by the user

B. Is always the company code currency

C. Is the currency of the chart of accounts

D. Is determined by the country field in the customer/vendor masters

?

5 B

6 Question – 6

Field status variants are company code dependent .

A. True

B. False

?

6 False



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2.3.1 Chart of Account

n Like fiscal year, Chart of Account (CoA) is also a variant created at client level, identified by a four character ID. CoA contains basicinformation of general ledger such as language, length of G/L account numbers, and creation of cost element. The length of a G/L numbercan be 1 to 10 characters.

n CoA must be assigned to every company code for which a general ledger master will be created. A CoA can be assigned to any numberof company codes in a particular client.

n In SAP, you will find several types of CoA: operational chart account, group chart of account, and country chart of account. A CoA can beclassified as a group CoA, operational CoA, or country CoA.

n The CoA assigned to company code is known as an operational CoA. While posting transactions, you choose a G/L account masterrecord of operational CoA. You can assign a CoA to company code through any of the following:


Or

¡ R/3 IMG Men u : Implementation Guide (IMG) → Financial Accounting→ General Ledger Accounting → G/L Accounts→ Master

Data→ Preparations→ Assign Company Code to Chart of Accounts

Or

¡ mySA P ERP IMG Menu : Implementation Guide (IMG) →Financial Accounting (New) → General Ledger Accounting (New) → Master Data→ G/L Accounts→ Preparations→ Assign Company Code to Chart of Accounts

n The CoA which is assigned to an operational CoA is called a Group CoA. You can assign a CoA to operational CoA through any of thefollowing methods:


Or

¡ R/3 IMG Men u : Implementation Guide (IMG) → Financial Accounting→ General Ledger Accounting → G/L Accounts→ Master

Data→ Preparations→ Edit Chart of Accounts List

Or

¡ mySA P ERP IMG Menu : Implementation Guide (IMG) →Financial Accounting (NEW) → General Ledger Accounting (New) → Master Data→ G/L Accounts→ Preparations→ Edit Chart of Accounts List .

n Figure 2.7 depicts the definition of an "INT" CoA. In the Figure 2.7 sample:

¡ The length of G/L account is 10.

¡ The maintenance language of the chart of account is "English."

¡ The integration will be a manual primary cost element for the relevant G/L account.

¡ The group CoA will be "CONS."



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Figure 2.7: T.Code: OB13 chart of account definition.

n The block indicator is used to prevent the user from using this CoA. If the check box is active, you can't create a G/L account under thisCoA. A block indicator is generally used when the CoA is not ready for use.

n If you enter a group CoA in the CoA, the system expects you to enter a group account number in the corresponding field in the G/L accountdefinition, which becomes the required entry field.

Answers

Answers

2.3.2 Retained Earnings Account

n In customizing, you define at least one retained earnings account for your chart of account. When you define one retained account whilecreating a G/L master record, the system automatically assigns a retained earning account to a G/L account. If you define more than one

7 Question – 7

You can assign a company code with

A. Three chart of accounts

B. Two charts of accounts

C. Only one chart of account

D. A chart of account called as operating chart of account

?

7 A

8 Question – 8

Which of the following statements is true? (multiple answers)

A. One company code can use multiple charts of accounts.

B. One chart of accounts can be used by multiple company codes.

C. A company code can have multiple operational chart of account .

?

8 B



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retained earnings account, the system allows you to choose the right retained earning account for G/L account. You can define retainedearnings account through either:


Or

¡ R/3 IMG Men u : Implementation Guide (IMG) → Financial Accounting→ General Ledger Accounting → G/L accounts→ Master

Records→ Preparations→ Define Retained Earnings Account

Or

¡ mySA P ERP IMG Menu : Implementation Guide (IMG) →Financial Accounting (New)→ General Ledger Accounting (New) →

Master Data→ G/L Accounts→ Preparations→ Define Retained Earnings Account

Figure 2.8: T.Code: OB53 retained earning account.

n As Figure 2.8 shows, we defined two retained account X – 900,000 and Y – 1,090,000, where X represents a retained account identifier

and the corresponding G/L account is "9,0000."

n When you create a G/L account master under CoA "INT," the system expects that you will choose a retained account, i.e. either "X" or "Y."

Answers

2.3.3 Account Groups

n In order to facilitate the grouping of accounts that have the same attributes, you define account groups. You need to define at least twoaccount groups: balance sheets accounts and income statement accounts. You can define G/L account groups through either:

¡ Transact ion Code: OBD4

Or

¡ R/3 IMG Men u : Implementation Guide (IMG) → Financial Accounting (New) → General Ledger Accounting (New) → Master Data

→ G/L Accounts→ Preparations→ Define Account Group.

Or

¡ mySA P ERP IMG Menu : R/3 menu Path: Implementation Guide (IMG) → Financial Accounting→ General Ledger Accounting

(New)→ Master Data→ G/L Accounts→ Preparations→ Define Account Group.

9 Question – 9

The P & L accounts balance is transferred to a retained earnings account. You determine the retained earning account as

part of the selection criteria when executing the Balance Carry Forward program.

A. True

B. False

?

9 False



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Figure 2.9: T.Code: OBD4 G/L account groups.

n Figure 2.9 demonstrates how various account groups are maintained for chart of account INTA. While creating the G/L master under CoAINTA, you need to select one of the account group maintained for this CoA.

n Account group controls the following attributes of a G/L account master:

¡ The fields displayed in the master record

¡ The number range of G/L accounts. By assigning number range to account groups, you are ensuring that the same types of G/Lmasters are created within the defined number range.

n Like the G/L account group, you will come across customer account groups and vendor accounts groups later in this book.

Answers

2.3.4 G/L Mater Number Range

n In the G/L account group, you assigned the G/L number range. While creating the G/L master you type in the new G/L number and selectthe appropriate account group. The system then ensures that the account group and the account number matches those defined in OBD4.Note that the number intervals of G/L master records can overlap.

2.3.5 G/L Masters

n A G/L master has two segments: the chart of account segment and the company code segment.

n Chart of account segment contains general information that applies to and is available to all company codes that uses that G/L account.

The CoA segment contains the following tab pages:

¡ Types/Descriptions: This tab contains short and long descriptions of the G/L master, types of G/L accounts, information on whether

10 Question – 10

An account group(there may be more than one answer)

A. Defines the number range for a mater record

B. Uses a field status group to control the field layout for the maintenance of master records

C. Determines one-time accounts for accounts payable and accounts receivable

D. Is defined for every company code

?

10 A, B, C



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this G/L is a balance sheet account or an income statement, account groups it belong to, group G/L account assignments, and thedefault trading partner. Figure 2.10 further illustrates this tab.

n In the CoA segment, you need to specify whether the account is a balance sheet account or a profit and loss account. During the year-endclosing these two account types are treated differently. Balance sheet accounts are carried over to next year to the same account, whileprofit and loss accounts of the net balance are carried over to retain earning account.

¡ Key works/Translation: In this tab, you will maintain the key words of the G/L account in other languages.

Figure 2.10: T.Code: FSP0 G/L master chart of account segment-type/descriptions.

Figure 2.11: T.Code: FSP0 G/L master chart of account segment-key words/translation.



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¡ Information: The system automatically updates some of the fields of this tab such as created on and created by. Besides these twofields you can see that there is a button to change document. If you select the "change document" button, the system will come up withChange Log.

Figure 2.12: T.Code: FSP0 G/L master chart of account segment-information.

n You can create chart of account segment using:

¡ Transact ion Code : FSP0

Or

¡ SAP Menu : SAP menu→ Accounting→ Financial Accounting→ General Ledger → Master Records → G/L Accounts→

Individual Processing→ In Chart of Accounts.

n In order to use G/L account from the assigned chart of account, you must create a company code segment for that account. Adding acompany code segment to the chart of account segment makes a complete G/L account. The company code segment containsinformation that is valid for relevant company code.

n You can create chart of account segment using:

¡ Transact ion Code : FSS0

Or

¡ R/3 IMG Men u : SAP menu→ Accounting→ Financial Accounting→ General Ledger → Master Records → G/L Accounts →

Individual Processing→ In Company Code

n When you execute T. Code FSP0, the system prompts you to enter company code, which brings up company-code specific information.

n Since each company code maintains its own company code segment data, company code data of same G/L accounts can be different forcompany codes using the same G/L account.

n Company code segment contains following tab pages:

¡ Control Data: This is one of the important tabs that controls much of information for a G/L master. A few of the important fields includeaccount currency, whether the G/L is a reconciliation account or not, and whether line item management and open item managementis active or not.



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Figure 2.13: T. Code: FSS0 company code segment-control data.

¡ Create/bank/interest : This tab contains a few important fields relating to posting control such as:

Figure 2.14: T. Code: FSS0 company code segment-create/bank/interest.

¡ Information: This tab holds some of the information relating to company code segment of the relevant G/L account.

n You can access both segments of a G/L account through either:

– Whether the manual posting is allowed

– Field status group assignment, which controls fields ready for input while entering transactions



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¡ Transact ion Code : FS00

Or

¡ R/3 IMG Men u : SAP menu→ Accounting→ Financial Accounting→ General Ledger → Master Records → G/L Accounts →

Individual Processing→ Centrally

Figure 2.15: T. Code: FSS0 company code segment-information.

Answers

2.3.6 Open Item Management

n Open items are considered incomplete transactions that are offset by another transaction. For example, vendor invoice is an open itembecause this transaction will be offset by outgoing payment.

n The balance of an open item managed account is always equal to the total of all other open items.

n The account with open item management must have line item display activated.

n You can activate or deactivate open item management when the G/L balance is zero. The activation or deactivation will have an effect ontransactions posted after the activation or deactivation.

n You should activate open item management of the accounts where you are expecting an offset entry to complete the transactions, such asa:

¡ Bank clearing account

11 Question – 11

What is the maximum permissible length of a G/L account number?

A. 6

B. 8

C. 10

D. 18

?

11 C



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¡ GR IR account

¡ Salary clearing account

n You can't archive a document that contains a line item with open item attributes. There are various ways you can clear a open items, suchas:

¡ While making an outgoing payment

¡ While receiving an incoming payment

¡ Through journal vouchers

n Open item clearing process always creates a clearing document. In SAP, you can see three types of clearing: post with clearing,automatic clearing, and clearing with another G/L.

n Posting with clearing : Normally this situation arises when you are posting incoming and outgoing payments. Incoming payments andoutgoing payments clear one or more open items equal to the open items. You can carry out posting with clearing either manually or byusing an automatic payment program.

n Automatic clearing : Automatic clearing is based on the configuration system subgroups, and clears open items of a G/L account.

n Through an automatic clearing program, you can clear open items of G/L accounts and sub-ledgers.

n All G/L accounts require that an automatic clearing process be set in configuration through either:


Or

¡ R/3 IMG Men u: Implementation Guide (IMG) → Financial Accounting→ General Ledger Accounting→ Business Transactions→

Open Item Clearing→ Prepare Automatic Clearing

Or

¡ mySA P ERP IMG Menu: Implementation Guide (IMG) → Financial Accounting (New) → General Ledger Accounting (New)→

Business Transactions→ Open Item Clearing→ Prepare Automatic Clearing

Figure 2.16: T. Code: SPRO automatic clearing setup.

n Figure 2.16 depicts a client level automatic clearing configuration. You can make this configuration for all CoAs or a specific CoA. If you

enter a CoA ID in the "ChtA" field, which is currently blank, the configuration will be specific to that CoA. The "AccTy" field contains accounttype indicator where D represents customer, K represents vendors, and S represents G/L accounts. The "From acct" field containsaccount numbers.

n The system provides five freely defined criteria to sum up open items for clearing along with the CoA and account types. If the sum of openitem based on selection is zero, then the system clears those open items and creates a clearing document.

n Automatic clearing program doesn't clear:

¡ Notes items

¡ Statistical postings

¡ Items with withholding tax entries

n Clearing with another G/L: In clearing with G/L type, you can clear entries of one account with credit entries of other accounts. You can

reach this functionality through either:

¡ Transact ion Code : F-04



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Or

¡ SAP Menu : SAP menu→ Accounting→ Financial Accounting→ General Ledger → Posting→ F-04 – Post with Clearing

Answers

n mySAP ERP Financials provides a new transaction code: FAGL_ACTIVATE_OP to activate the open item management attribute of a

G/L master records, in case it was not activated while creating the G/L master records. This new transaction code is available fromenhancement package 3 with software component EA-APPL (SAPK-60504INEAAPPL) and your activated business function

FIN_GL_Cl_1. You can activate business function by using the following transaction code: SFW5 or menu path IMG → Activate SAP ECC

Extensions. Refer SAP Note: 1356457 for more functionality.

2.3.7 Line Item Management

n You can activate the line item management field in the control tab pages of the company code segment. This field controls how thetransactions are updated and stored in the SAP tables.

n If this field is active, it ensures that posted line items are stored in a special index table so that you are able to see details and totaltransaction those are posted to the G/L accounts.

n As you are capturing additional data, you should activate this field when you don't have any other source/alternatives to get detailtransactions.

n Some of G/L accounts for which you should not activate line item management include:

¡ Reconciliation accounts: such as customer reconciliation accounts, vendor reconciliation accounts, assets reconciliation accountsand all alternative reconciliation accounts. Reconciliation accounts are control accounts. Detailed transactions are available in thesubsidiary ledger.

¡ Revue Accounts: In these accounts posting happens through account determinations. In this case, detail transactions are available inthe sales and distribution modules.

¡ Material stock accounts: These accounts detail inventory that is managed in material management modules.

¡ Tax accounts: When you are using an external tax system, detailed transactions are available in the external system.

n When creating a G/L master record, decisions have to be made about whether or not the account should be managed as a line itemmanagement. Once transactions are posted to a G/L account it is difficult and time consuming to change line item management attributesof G/L accounts.

Answers

2.3.8 Account Currency

12 Question – 12

What is meant by open items management in a G/L account master record?

A. Items on that account can never be cleared

B. Items on that account can be cleared

C. No balances are available for that account


?

12 B

13 Question – 13

What is meant by line item display in a G/L account master record?

A. Only line items can be displayed

B. Only balances can be displayed

C. Line items and balances can be displayed


?

13 C



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n When creating a G/L master record, you should select either one of the following currencies:

¡ Local currency – company code currency

¡ Foreign currency – currency other than company code currency

When you create a G/L master record, the system proposes local currency (company code currency) by default. If the account currency is localcurrency, the account can be posted to any currency. If the account is posted with foreign currencies, the system will translate foreigncurrencies into local currencies.

n Accounts managed in foreign currency can only be posted in foreign currency.

2.3.9 Document Concept in mySAP ERP Financials

n Every transaction that changes value in a company code is recoded in an accounting document called an FI document.

n Each accounting document in mySAP ERP Financials consists of at least two line items and a maximum of 999 line items.

n Each FI account document consists of a document header and line items. The document header consists of company code, documentdate, posting date, document currency, and document type, which are applicable to whole document. Line items consist of variousattributes of posting line items such as G/L account number, amount per line items, and associated cost objects.

n In mySAP ERP an accounting document is uniquely identified by a combination of following:

¡ Document number

¡ Company code

¡ Fiscal year

n You can view an accounting document through:

¡ Transact ion Code :FB03

Or

¡ SAP Menu: SAP menu→ Accounting→ Financial Accounting→ General Ledger → Document→ Display

n In mySAP ERP Financials, FI document are controlled by:

¡ Document type

¡ Posting key

¡ Field status group (FSG) in the relevant G/L account

n A document that has already been posted cannot be deleted. However, you can correct the document through change document or byreversing the original document.

n The user can change certain fields at document header level and line item level of a document that has already been posted based onconfiguration.

n However, the system does not permit to changes to following fields:

¡ Amount

¡

Posting key

¡ Gl accounts

¡ Customer number

¡ Vendor number

¡ Asset numbers

n The system maintains the following information in the document change log:

¡ Changed field name

¡ Old value and new value

¡ User who changed it

¡ Date and time of such changes



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n You can configure FI document change rule through either:


Or

¡ R/3 IMG Men u: Implementation Guide (IMG) → Financial Accounting→ Financial Accounting Global Settings→ Document

…………. Document Header→ Document Change Rules, Document Header

………….Line Item→ Document Change Rules, Line Item

Or

¡ mySA P ERP IMG Menu: Implementation Guide (IMG) → Financial Accounting (New)→ Financial Accounting Global Settings

(New)→ Document→ Rules for Changing Documents→

…………‥

Document Change Rules, Document Header

…………. Document Change Rules, Line Item

Answers

Answers

Answers

14 Question – 14

In financial accounting a FI document date

A. Must be in the same period as the posting date

B. Must be in a period higher than the posting date

C. Must be in a period lesser than the posting date

D. Can be in any date independent of the posting date

?

14 D

15 Question – 15

When you execute automatic clearing program, the original documents are

A. Cleared and deleted from the system

B. Cleared, deleted, and archived from the system

C. Cleared in the system


?

15 C

16 Question – 16

In financial accounting a residual posting

A. Generates a new line item

B. Reduces the value in the original invoice line item

C. Reverses the original line item

D. Generates a parking document

?

16 A

17 Question – 17

What is the maximum number of line items allowed in an accounting document?

?



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Answers

Answers

2.3.10 Document Types

n Document type controls the header part of a financial document while posting key and FSG controls line fields available for input whileposting a transaction.

n Document types are used to differentiate business transactions, for example, customer invoices, vendor invoices, and assets posting.

n Document type in mySAP ERP controls the following important attributes of financial document:

¡

Account types allowed for posting (customer, vendor, material, assets, and G/L accounts)

¡ Document number ranges

¡ Free test fields

n You can create or change FI document types through:

¡ Transact ion Code: OBA7

Or

¡ R/3 IMG Men u: Implementation Guide (IMG) → Financial Accounting→ Financial Accounting Global Settings → Document→

Document Header → Define Document Types

Or


(New)→ Document→ Document Types→ Define Document Types for Entry View

A. 2

B. 50

C. 100

D. 999

17 D

18 Question – 18

In financial accounting, a document currency

A. Can be any currency

B. Must be the company code currency

C. Is the controlling area currency

D. Must be the currency defined in the G/L master

?

18 A



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Figure 2.17: T.Code: OBA7 create / change document types.

n Figure 2.17 depicts pre-delivered document type AA.

n Document types are client dependent, which means that once document types are created they are available across the company codes.

n A few standard SAP delivered types of document are:

¡ AB (Accounts doc): used for all types of accounts

¡ AA (Asset posting): used for assets related postings

¡ DR (Customer invoice): used for customer invoice posting

¡ DZ (Customer payment): used for customer-incoming payment

¡ KR (Vendor invoice): used for vendor-invoice posting

¡ KZ (Vendor payment): used for vendor payment

n The following types of documents are used for data transferred from other modules:

¡ WE (Goods receipt): Used to capture goods receipts data flows from MM modules

¡ RE (Gross inv. Receipt): used to capture logistic invoice verification data

¡

RV (Billing doc. transfer): used to capture sales related data from SD modules

n All of these types of documents can be used as is or modified.

Answers

19 Question – 19

Which of the following statements is true? (multiple answers)

A. One document type can use only one number range

B. One document type can use multiple number ranges

C. One accounting document created with multiple document types

D. One number range cannot be used by multiple document types

?

19 D



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2.3.11 Document Number Ranges

n In mySAP ERP Financials, each FI document receives a unique document. This document may be an internal assigned number (calledinternal number range) or user assigned number (external number range).

n Internal document number range: In case of internal document number ranges, document numbers are always numerical. When saving anFI document the system assigns the document a number from the assigned number range to a document type.

n External document number range: When recording a business transaction, the user assigns a document number from the assignednumber range to document type. In case of external number ranges, the document number can be alpha-numeric.

n You can create an FI document number range through:

¡ Transact ion Code : FBN1

Or


Document Number Ranges→ Define Document Number Ranges

Or

¡ mySA P ERP IMG Menu : Implementation Guide (IMG) → Financial Accounting (New)→ Financial Accounting Global Settings

(New)→ Document→ Document Number Ranges → Documents in Entry View → Define Document Number Ranges for Entry

View

Figure 2.18: T. Code: FBN1 FI document number range.

n Figure 2.18 depicts a number range maintenance screen. By checking the "Ext" check box against a number range, you are making thatnumber range an external number range.

n The current number field of the Figure 2.18 shows the next available number in that number range group. In the case of an external numberrange group, this field will be blank.

n Each number range is represented by a number range ID, which you need to key in the document type maintenance screen as show inFigure 2.18 in the number range field.

n Document number ranges are company code dependent. Document number ranges can either be year dependent or year independent.

n Year dependent number range: These document number ranges are specific to a year. If the document number ranges are yeardependent, you need to create an FI document number range before the beginning of each new year. Figure 2.18 depicts a yeardependent number range valid for the year 2011.



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Figure 2.19: T. Code: FBN1 year independent number range.

n Year independent number range: Figure 2.19 depicts a year independent number range. By entering "9999" in the year field you canmake a number range independent from the fiscal year. The FI document number range continues one year to the next.

n A number range can be assigned to multiple document types. In this case, document types share document number ranges.

n You can find number range gaps either through:

¡ Transact ion Code : S_ALR_87009880

Or

¡ R/3 IMG Men u:

Or

¡ mySA P ERP IMG Menu

Did you ever face document number range gaps? Here is the concept:

In some cases of number ranges, SAP uses a number range buffering concept. In buffering concept systems defined buffer numbersare allocated to the user and next number + buffer numbers to the second user, and so on. For example, User A logged into the system

and initiated a COPA posting. While initiating the COPA transaction, the next available number is 1000000010, and the default

buffering number is 110. This means the system will allocate 1000000010 to 1000000119 to User A and 1000000120 to 1000000229

to User B, and so on.

These buffer allocated numbers are stored in the shared memory of the application server. If you lose the shared memory for whatever

reason, the system cannot utilize the number stored in the shared memory, and creates gaps between document numbers.



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Figure 2.20: T. Code: SNRO number range buffering.

In the case of some number range objects, standard SAP comes with the number buffering switch on. You can turn the number range

buffering off by unchecking "Main memory buffering" check box in transaction code SNRO or SAP menu → Tools→ ABAP Workbench

→ Development→ Other Tools → Number Ranges. Figure 2.20 T. Code: SNRO number range buffering shows the number range set

up for actual COPA line items. The object name here is COPA_IST and the associated IMG transaction code for the number range

maintenance is KEN1. As you can see, the number range buffering has been switched on, which also maintains what would be the

number range buffer .

Refer to OSS Note 175047 –

Causes for FI document number gaps (RF_BELEG) for more information. This number buffering conceptis not only applicable to FI module, as it works with other modules as well .

2.3.12 Posting Keys

n Similar to document types, posting keys are created and maintained at client level. A posting key is a two character numeric ID whichdetermines:

¡ Account types to which posting will be made

¡ Whether amount will be debited or credited

¡ Fields available for input

n The posting keys have been enhanced for the enjoy transactions. You use Dr. or Cr. instead of posting keys.

n The pre-configured SAP system comes with posting keys, however you can create your own posting keys through either:


Or


Line Item→ Controls→ Define Posting Keys

Or


(New)→ Document→ Define Posting Keys

n The pre-configured posting keys are:

Table 2.2



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Posting Key Posting Key Desc. Dr. / Cr. Account Typevs

1 Invoice Debit Customer

2 Reverse credit memo Debit Customer

3 Bank charges Debit Customer

4 Other receivables Debit Customer

5 Outgoing payment Debit Customer

6 Payment difference Debit Customer

7 Other clearing Debit Customer

8 Payment clearing Debit Customer

9 Special G/L debit Debit Customer

11 Credit memo Credit Customer

12 Reverse invoice Credit Customer

13 Reverse charges Credit Customer

14 Other payables Credit Customer

15 Incoming payment Credit Customer

16 Payment difference Credit Customer

17 Other clearing Credit Customer

18 Payment clearing Credit Customer19 Special G/L credit Credit Customer

21 Credit memo Debit Vendor

22 Reverse invoice Debit Vendor

24 Other receivables Debit Vendor

25 Outgoing payment Debit Vendor

26 Payment difference Debit Vendor

27 Clearing Debit Vendor

28 Payment clearing Debit Vendor

29 Special G/L debit Debit Vendor

31 Invoice Credit Vendor

32 Reverse credit memo Credit Vendor

34 Other payables Credit Vendor

35 Incoming payment Credit Vendor

36 Payment difference Credit Vendor

37 Other clearing Credit Vendor

38 Payment clearing Credit Vendor

39 Special G/L credit Credit Vendor

40 Debit entry Debit G/L account

50 Credit entry Credit G/L account

70 Debit asset Debit Asset

75 Credit asset Credit Asset

80 Stock initial entry Debit G/L account

81 Costs Debit G/L account

83 Price difference Debit G/L account

84 Consumption Debit G/L account

85 Change in stock Debit G/L account

86 GR/IR debit Debit G/L account

89 Stock inward movement Debit Material

90 Stock initial entry Credit G/L account

91 Costs Credit G/L account

93 Price difference Credit G/L account

94 Consumption Credit G/L account

95 Change in stock Credit G/L account

96 GR/IR credit Credit G/L account99 Stock outward movement Credit Material



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Figure 2.21: T. Code: OB41 posting key configuration.

n Figure 2.21 shows a configuration screen of pre-delivered posting key 01. Posting 01 is used for customer Dr. For example, if you areselling your product and posting the transaction into FI through enjoy transaction, then you would use posting key 01 to Dr. customer.

n In posting key configuration, you are determining attributes of posting keys:

¡ Whether the posting is a Dr. or Cr. posting key

¡ What type of accounts type will be posted with this posting key

¡ Whether the posting key is sales related or not

¡ What the reversal posting key would be

Answers

2.3.13 Field Status Groups

n When entering an FI document, you can see various fields available for input. Fields available for input varies from G/L accounts due to thedifferent field status group assignment to G/L accounts. For example, if you are posting to an expenses account, the system is expecting acost object, while posting to a G/L account, the system doesn't need a cost object.

n In customizing, you can maintain or create a field status variant. The field status variant is created at client level and is assigned to a

company code. A field status variant can be assigned to more than one company code.

n Field status variant consists of one or more field status groups. You can assign field status groups to a G/L account master.

20 Question – 20

In the standard system, the posting key 40 refers to

A. Credit to general ledger account

B. Debit to general ledger account

C. Debit to vendor account

D. Credit to vendor account

?

20 D



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n Field status groups consist of field groups where you can determine which fields are required, optional, displayed, or suppressed.

n Even though field status groups control fields of document entry screens, there are certain exceptions. These include:

¡ If the business area used and business area financial statement is activated, then you can define whether the field is required oroptional.

¡ Even though the tax field is ready for input, you can enter only the G/L account relevant for tax. The field status hide cannot becombined with required.

¡ If the document is posted to a subsidiary ledger, then the field status groups assigned to a reconciliation account control the fields.

n You can create and maintain field status variant through either:


Or


Line Item→ Controls→ Define Field Status Variants

Or

¡ mySA P ERP IMG Menu: Implementation Guide (IMG) → Financial Accounting (New) → Financial Accounting Global Settings

(New)→

Ledgers→

Fields→

Define Field Status Variants

n Once you have created the fields status variant, you can assign fields status variant to company code through either:


Or


Line Item→ Controls→ Assign Company Code to Field Status Variants

Or


(New)→ Ledgers→ Fields → Assign Company Code to Field Status Variants

Answers

2.3.14 Employee Tolerance Group

n Employee tolerance group is used to restrict certain groups of employees from performing certain transactions for which they are notauthorized. It is also used to authorize certain group of users to post an accounting entry up to certain monetary limit. In order to posttransactions to FI, you need to have at least one employee tolerance group. Setting up an employee tolerance group is two-step process:define an employee tolerance group and assign an employee tolerance group to user.

n You can define an employee tolerance group through either:

¡ Transact ion Code : OBA4

Or


Line Item→ Define Tolerance Groups for Employees

Or

21 Question – 21

The fields available while posting a transaction are controlled through the field status group at

A. Posting key only

B. Field status of Posting key and G/L masters

C. Field status group in G/L master records only


?

21 B



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(New)→ Document→ Tolerance Groups → Define Tolerance Groups for Employees

n Once you have created an employee group you need to assign an employee through either:


Or


Line Item Assign User/Tolerance Groups

Or


(New)→ Document→ Tolerance Groups → Assign User/Tolerance Groups

n Whether or not you use the functionality of an employee tolerance group, in order to post transactions into FI you need to configure a leastone employee tolerance group.

n If you don't want to use an employee tolerance limit functionality, you can create a dummy employee tolerance group with "blank" as thegroup ID.

n Employee tolerance groups control:

¡ The upper monitory limit per document

¡ The upper monetary limit per line items

n Maximum cash discount a user is able to grant

n Figure 2.22 depicts an employee tolerance group set up. Employee tolerance group is company code dependent and is always in thelocal currency.

Figure 2.22: OBA4 employee tolerance group.

n If the group ID is blank, you do not need to assign to any specific employee, but you do need to assign an employee tolerance group ID touser ID.

2.3.15 G/L Tolerance Group

n The G/L tolerance group controls the permitted payment difference for clearing open G/L items. You can define this tolerance either in anabsolute amount, a percentage, or both. When you define tolerance limit in an amount and a percentage, the G/L account system willconsider the amount and the percentage while clearing.



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n You can create a G/L tolerance group through either:

¡ Transact ion Code : OBA0

Or


Open Item Clearing→ Clearing Differences

Or

¡ mySA P ERP IMG Menu: Implementation Guide (IMG) →Financial Accounting (New)→ General Ledger Accounting (New) →

Business Transactions→ Open Item Clearing→ Clearing Differences → Define Tolerance Groups for G/L Accounts

n In order to clear a G/L account the system expects at least one G/L tolerance group. Like employee tolerance, you can create a blanktolerance group. If no tolerance group is assigned to G/L master record, then the blank tolerance group applies.

Figure 2.23: OBA0 - G/L tolerance group.

n Figure 2.23 shows a pre-delivered G/L tolerance group for company code 1,000, where tolerance is defined as both an absolute amountand percentage.

n Let us assume that you want to clear a Dr transaction of EUR 1,000.00 with Cr. transaction of EUR 980.00. In this case, in terms ofabsolute amount you can clear the open EUR 1,000.00 against EUR 980.00, but it doesn't fulfill tolerance in terms of the percentage. If youmaintain both tolerance in terms of the amount and percentage, the system considers the minimum in both tolerances in order to clear anopen item.

In order to activate G/L tolerance, you need to assign G/L tolerance group to G/L master in the control data tab. Figure 2.24 depicts the G/Ltolerance group assignment in G/L master record. As you are assigning G/L tolerance group at company code level, you can assign differenttolerance groups to G/L master for different company codes.



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Figure 2.24: FS00 G/L tolerance group assignment.

2.3.16 FI Document Reversal

n SAP ERP doesn't allow you to delete a document once it is posted in order to make a correction. In order to make a correction, you needto reverse the FI documents. If the document is originated from another module, you need to reverse the source document in order toreverse the FI document.

n SAP ERP provides two types of reversals: normal reversal and negative reversal.

n Normal Reversal : When you are using normal reversal, the system posts credit for incorrect debit and debit for incorrect credit. There isno additional set up required for normal reversal.

n Negative Reversal : If configuration is available, you can perform negative reversal. In case of negative reversal, the system posts negativecredit for incorrect credit and negative debit for incorrect debit.

n In order to use negative reversal, you need to configure the following two steps:

¡ The company code must permit negative posting

¡ Reversal reason code for negative posting

n You can configure negative posting permission through either:


Or


Adjustment Posting/Reversal → Permit Negative Posting

Or

¡ mySA P ERP IMG Menu: Implementation Guide (IMG) → Financial Accounting→ General Ledger Accounting (New) → Business

Transactions → Adjustment Posting/Reversal→ Permit Negative Posting

n You can configure reversal reason code for reversal posting through either:


Or


Adjustment Posting/Reversal → Define Reasons for Reversal



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Or

¡ mySA P ERP IMG Menu: Implementation Guide (IMG) → Financial Accounting→ General Ledger Accounting (New) → Business

Transactions → Adjustment Posting/Reversal→ Define Reasons for Reversal

n SAP application provides two categories of reversal: individual reversal and mass reversal. Individual reversal is used for the reversal ofan FI document individually, while mass reversal is used for the reversal of more than one document at a time.

n You can reverse a G/L, customer, or vendor document individually through either:

¡ Transact ion Code : FB08

Or

¡ SAP Menu: SAP menu→ Accounting→ General Ledger→ Document→ Reverse→ Individual Reversal

n For mass reversal follow either:

¡ Transact ion Code : F.80

Or

¡ SAP Menu: SAP menu→ Accounting→ General Ledger→ Document→ Reverse→ Mass Reversal

n When using the document reversal process, remember to update the original document with the reversal document number, so that youcan relate the original document with the reversal document and navigate back and forth.

n You can't reverse a cleared document. If the document is already cleared by another document, you need to reset the clearing documentbefore reversal.

n During the reset process, the system breaks the clearing relation between the documents. You can perform reset and reversal in one step.Follow either of the following options for reset and reversal:

¡ Transact ion Code : FBRA

Or

¡ SAP Menu: SAP menu→ Accounting→ General Ledger→ Document→ Reset Cleared Items

n

The reversal system uses the reversal document type associated with the original document type. In Figure 2.17, you can see a fieldavailable for reversal document type.

n Since the document reversal process is automatic, the system is expecting an internal document number range in case of reversaldocument type.

2.3.17 Cross-Company Code Transactions

n Cross-company code transactions involve two or more company codes in a business transaction.

n In cross-company code transaction, the system posts a separate document for each company code with company code specific documentnumbers.

n Individual company documents are linked together by a cross-company document number.

n For example, the following types of transactions create cross-company code transactions:

¡ An employee works in different company codes for part of the time

¡ An employee changes company code during a payroll period

¡ One company code makes purchases for other company codes (central procurement)

¡ One company code pays invoices for other company codes (central payment)

¡ One company code sells goods to other company codes

n You can display cross-company code transactions through either:

¡ Transact ion Code : FBU3

Or

¡ SAP Menu: SAP menu→ Accounting→ General Ledger→ Document→ Cross-Company-Code Transaction→ Display



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n You can reverse cross-company transactions through either:

¡ Transact ion Code : FBU8

Or

¡ SAP Menu: SAP menu→ Accounting→ General Ledger→ Document→ Cross-Company-Code Transaction→ Reverse

n Once you execute FBU8, the system displays whether all associated documents are reversible or not.

n In order to process cross-company code transactions, you need to define cross company code clearing account through either:

¡ Transact ion Code : OBYA

Or


Prepare Cross-Company Code Transactions

Or

¡ mySA P ERP IMG Menu: Implementation Guide (IMG) → Financial Accounting (New) → General Ledger Accounting (New) →

Business Transactions→ Prepare Cross-Company Code Transactions

n

These clearing accounts can be set up as either a G/L account or as a subsidiary ledger. In both cases you need to configure intransaction code OBYA with different posting keys.

n Figure 2.25 depicts the cross-company code configuration between company codes 1,000 and 2,000. In this case company code 1,000clearing account 194,002 for company code 2,000 is set up as a G/L account. Similarly, in company code 2,000, clearing account194,001 for company code 1,000 is set up as a clearing account. Company code 1,000 initiates Dr. entry with company code 2,000. Thesystem creates receivables by debiting G/L account 194,002 in company code 1,000 and payable in company code 2,000 by crediting194,002.

Figure 2.25: T.Code: OBYA cross-company configuration.

n When the system posts cross-company code transactions, it generates a cross company code document. The cross-company codedocument is the combination of the document number of originated company code + company code + fiscal year.

n Figure 2.26 depicts a cross-company code document. You can see there are three document numbers: cross-company code documentnumber, document number for company code 1,000, and document number for company code 3,000.



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Figure 2.26: Cross-company code document.

Answers

2.3.18 Foreign Exchange

n An exchange rate difference occurs during the following circumstances:

¡ When you clear open items

¡ When you valuate open items for your financial statements

n When you clear open items, the system runs through the foreign exchange valuation process and post exchange loss or gain to pre-configured accounts.

n Occasionally, you maintain a certain account in something other than local currency. In these circumstances, you need to reevaluate theaccount for your financial statement, because financial statements must be prepared on local currency.

n In the foreign exchange reevaluation process, the system generates two types of foreign exchange differences: realized loss or gain andunrealized loss or gain.

n Realized gain or loss arises when you are clearing open items. This normally occurs in either of the following circumstances:

¡ When you are clearing open items in a G/L account or between G/L accounts, such as offsetting Dr. entries with Cr. entries

¡ When you post an incoming payment against a customer invoice

¡ When you post an outgoing payment to clear vendor invoices

n In these circumstances, the system posts the foreign exchange difference, if any, to realized gain or loss, because these are finalsettlements of open items.

n Unrealized foreign gain or loss arises when you are revaluating your foreign currency open items or foreign currency G/L accounts forfinancial statement. Foreign exchange differences that arise in this process are posted to unrealized account to minimize foreignexchange exposure, while the final settlement of the transaction presents a true and fair presentation of the financial statement.

n While making the final settlement of foreign currency open items or foreign currency G/L accounts, the system corrects the balance sheetadjustment account post foreign exchanges difference, if any occurs.

n As the system posts realized, unrealized gains or losses to preconfigured set of G/L account automatically, the system expects that you

have configured the SAP application. You can configure the SAP application through either:


22 Question – 22

You can post financial transactions to

A. Multiple company codes

B. Multiple business areas

C. Multiple cost centers

D. All of the above

?

22 D



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Or


Open Item Clearing→ Define Accounts for Exchange Rate Differences

Or

¡ mySA P ERP IMG Menu: Implementation Guide (IMG) → Financial Accounting (New) → General Ledger Accounting (New) →

Business Transactions→

Open Item Clearing→

Define Accounts for Exchange Rate Differences

n This configuration is client specific rather than company code specific. You can assign different sets of accounts based on the G/Laccount, currency, and currency type. If you keep the currency and currency type field blank, the system assumes that this configuration isapplicable for all currencies and currency types.

n Figure 2.27 shows account determination of foreign exchange losses and gains. It consists of four parts:

1. Header: Consists of G/L account, currency, and currency type for which you are making account determination.

Figure 2.27: T.Code OB09 foreign currency configuration.

2. Exchange rate difference realized: Here you assign income statement G/L accounts to the system, which will then post foreign

exchange realized gains and losses.

3. Valuation: When you valuate open items or foreign currency G/L accounts, the system posts the G/L account maintained in this section.

4. Translation: The G/L accounts maintained in this section are posted with foreign exchanges losses or gains that arise during valuation,

when your group currency is different than the operating currency.

n You can run foreign exchange valuation for G/L, AP, or AR through either:

¡ Transact ion Code : F.05

Or

¡ SAP Menu: SAP menu→ Accounting→ General Ledger→ Periodic Processing→ Closing→ Valuate→ Foreign Currency

Valuation.

n You must maintain the account determination for foreign currency realized, as well as unrealized losses and gains, G/L accounts for allreconciliation accounts, and open item managed accounts.

2.3.19 Holding/Parking a Document

n You can save a document in a two different ways: hold a document or park a document. Holding and parking a document is applicable in a



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similar way to all sub-modules of FI, such as general ledger accounting, accounts receivable, accounts payable, and assets accounting.

n Hold Document : Hold document is used to save entered data temporally into the system memory, which can be completed at a laterperiod. In case of hold document:

¡ System does not assign a document number to saved document

¡ System does not update the G/L account balance

¡ System does not consider entered data for evaluation

¡ Hold document is named by the user

¡ The document does not need to be a balanced document

n Park Document : Similar to hold document, you can temporarily park an incomplete document and complete and post it at a later date. Incase of park document:

¡ System assigns a document number

¡ System does not update the G/L account balance

¡ Park document data is available for real time evaluation

¡ System doesn't balance transactions

¡ System does not carry out substitute functionality for parked document

n You may choose to park a document for many reasons. A few reasons are:

¡ Separation of Duties: Parking functionality helps to follow the principle of dual control, where the data enterer is not allowed to postdata.

¡ Non-availability of information: While entering a transaction, you may not have enough data to complete the document.

n A parked document can be completed, changed, and posted at a later point in time by the person who entered the document, or someoneelse, to convert the parked document into a financial document.

n A park document is largely used in order to enforce dual control, authorization, and the implementation of workflow.

n In the case of a cross-company code document, the system creates one park document. When you post the parked document, the system

creates cross-company code documents and company code documents.

n A parked document can be edited and completed all at once or step by step. The system logs all changes in the parked document. Youcan view these changes before or after posting a parked document. You may post individual or multiple parked document through either:

¡ Transact ion Code : FBV0

Or

¡ SAP Menu: SAP menu→ Accounting→ General Ledger→ Document→ Closing→ Parked Documents → Post/Delete.

n You can't edit or change the following objects in a parked document:

¡ Document currency

¡ Document type and document number

¡ Company in the document header

n You can edit or change an individual document or several documents through work list. If you are posting several parked documentsthrough selection list, the system provides a list that indicates the document posting status. The system provides a list of documents thatcould not be processed due to missing objects.

n When you post a parked document, the system performs the following functions:

¡ Creates an account document, which updates the G/L, AP, AR, and AA balances, if applicable

¡ Logs a document change log

¡ Deletes parked document information

¡ Carries validation or substitution, if applicable

23 Question – 23 ?



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Answers

Answers

Answers

Answers

Answers

When a document is parked

A. System assigns a document number but doesn't update the general ledger, customer balance, or vendor balance

B. System assigns a temporary document number and doesn't update the general ledger, customer balance, or vendor

balance

C. The document is posted with the actual document number

D. The document is posted with a temporary account number

23 A

24 Question – 24

You can ________.

A. Modify

B. Delete

C. Post

D. All of the above

?

24 D

25 Question – 25

The document header reference field is controlled through

A. Document Type

B. Field status group assigned to general ledger accounts

C. Posting key

D. All of the above

?

25 A

26 Question – 26

A financial document should have at least two line items, however, you can't have more than 999 line items.

A. True

B. False

?

26 A

27 Question – 27

To see line items in the general ledger, you need to activate the line item management in the general ledger master record .

A. True

B. False

?

27 A



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Answers

2.4 Accounts Payable (SAP ® FI-AP)

n In day to day business, an enterprise purchases various products and services from its business partner called the vendor. Depending onwhich SAP modules you are using, account payable modules interact with other modules. Most account payable modules get their datafrom material management (MM) modules.

n Accounts payable is a sub-module of SAP FI modules and treated as a sub-ledger of general ledger. In the following section we'll discussvarious concepts, configurations, and use of the accounts payable module.

Figure 2.28: Accounts payable objects. © Copyright 2012. SAP AG. All rights reserved.

n Figure 2.28 depicts various client dependent and company code dependent objects of account payable. You can use a client dependentobject in more than one company code, while company code dependent objects are specific to company code. You can't share company

code dependent objects with more than one company code.

2.4.1 Vendor Account Group

n You should group together vendors with similar attributes under one group. This allows you to maintain vendor master in a similar way. Youbase the groupings on geography, trade practice, and business segments. For example, you can group vendors as government vendorsand normal vendors.

n Vendor grouping is called an account group. Vendor group determines:

¡ Vendor number range: In SAP, it is identified with an unique number within a client. You assign a number rage ID to a vendor group.

¡ One time vendor : Whether or not the vendor belongs to a one-time vendor.

¡ Fields for input : The vendor master consists of numerous fields. A field may be relevant for one vendor but not relevant to another.

Based on vendor groups, you can control which fields are relevant for the vendor master.

28 Question – 28

Every company code must have a(n) ________________ chart of account.

A. Operating

B. Group

C. Country

?

28 A



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Figure 2.29: T. Code OBD3 vendor account group.

n Figure 2.29 depicts the vendor group 0001. By checking and not checking you can determine whether the vendor is a one time vendor ornot. You can also maintain field status of the vendor master record by double clicking on general data, company code data, or purchasingdata of vendor master records.

2.4.2 Vendor Number Ranges

n As a vendor master is created at the client level, the vendor number is same for all company codes within a client.

n The vendor numbers can external or internal.

n In the case of an internal number range, while saving, the vendor master record system assigns the next available number from theassigned number range. The internal number rage will always be numerical.

n In the case of an external number rage, the user needs to key in the vendor number while creating vendor master record. With the external

number range, the vendor number can be alpha numeric. The external number range is suitable in a situation where an application otherthan SAP controls the vendor master data.

n You can create or manage the vendor number range through either:

¡ Transact ion Code : XKN1

Or

¡ R/3 IMG Men u : Implementation Guide (IMG) → Financial Accounting→ Accounts Receivable and Accounts Payable → Vendor

Accounts→ Master Data→ Preparations for Creating Vendor Master Data → Create Number Ranges for Vendor Accounts

Or

¡ mySA P ERP IMG Menu: Implementation Guide (IMG) → Financial Accounting (New) → Accounts Receivable and Accounts

Payable→

Vendor Accounts→

Master Data→

Preparations for Creating Vendor Master Data→

Create Number Ranges forVendor Accounts.

n Figure 2.30 shows the vendor number range maintenance screen. In this screen, you need to assign the number range to an ID. Theexternal column appears in the last column controls, whether or not the number range is internal or external. If the check mark is active thatmeans the number range is external. If the number range is external, the current number will be always blank. In the case of an internalnumber range, the current number column will display the next available number.



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Figure 2.30: T. Code: XKN1 create vendor number range.

n After the creation of the vendor number range, you need to assign the number range to a vendor group. You can assign one number rangeto multiple vendor groups. In this case, the assigned number range will be shared with multiple vendor groups.

n You can assign a number range through either:

¡ Transact ion Code : OBAS

Or


Accounts→ Master Data→ Preparations for Creating Vendor Master Data → Assign Number Ranges to Customer Account

Groups

Or

¡ mySA P ERP IMG Menu: Implementation Guide (IMG) →Financial Accounting (New)→ Accounts Receivable and Accounts

Payable→ Vendor Accounts → Master Data→ Preparations for Creating Vendor Master Data → Assign Number Ranges to

Customer Account Groups.

Figure 2.31: T.Code: OBAS vendor number range assignment.

n Figure 2.31 depicts, number range 01 assigned to vendor group 0001.

2.4.3 Normal Vendor vs. One Time Vendor

n In SAP there are two types of vendors: a normal vendor and a one time vendor. All vendors other than one time vendors are considerednormal vendors. One time vendors are vendors with whom you do rarely business.

n The vendor account group determines whether the vendor master record is a normal vendor or one time vendor.

n Normal vendor master records hold information specific to a vendor, while a one-time vendor master does not contain any specificinformation relating to a vendor.

n While posting to a normal vendor, the system copies vendor related information to transactions, but in the case of a one time vendor, youneed to key in the vendor related information at the transaction level.

Answers

29 Question – 29

When you post to a one-time vendor or customer you enter details such as vendor name and address, at the line item level .

A. True

B. False

?



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2.4.4 Vendor Master Records

n Like G/L master record views, a vendor master record has three views. A complete vendor master record has the following three views:

¡ General data segment

¡ Company code segment

¡ Purchasing organization segment

n General data segment : General segment data are maintained at the client level. This data are shared by other company codes if they usethe same vendor master data.

n Company code segment : Company code segment contains data that are relevant for a company code. These data are not shared byother company codes. Different company codes will give a different set of data for one vendor.

n Purchase organization data: Purchase organization segments contain data specific to that purchase organization.

n While creating the vendor master, you need key in the vendor account group. The vendor account group controls:

¡ Vendor number range assignment

¡ Field status of vendor master record

¡ Whether the vendor is a normal vendor or one time vendor

n Vendor master record fields are controlled at three levels: account group specific control, transaction specific control, and company codespecific control.

n Account group specific control : Using the transaction code OBD3, you can see that there is field status control group. You can controlvendor master layout at the account group level, which means all vendors falling under one group have similar screens and fields.

n Transaction specific control : To maintain vendor master data, you are performing three types of activities: create, change, and display.Through transaction specific control you can control the field status vendor master record. For example, you can set one field as displaythrough transaction specific control. While creating the vendor master, the system will not allow entering or editing in that particular field.

n You can perform a transaction specific control through either:


Or


Accounts→ Master Data→ Preparations for Creating Vendor Master Data → Define Screen Layout per Activity (Vendors).

Or


Payable→ Vendor Accounts → Master Data→ Preparations for Creating Vendor Master Data → Define Screen Layout per

Activity (Vendors).

n Company Code specific control : Through company code specific control, you can control the field status of the company code segment.

n You can perform a company code specific control through either:


Or


Accounts→ Master Data→ Preparations for Creating Vendor Master Data → Define Screen Layout per Company Code

(Vendors).

Or


Payable→ Vendor Accounts → Master Data→ Preparations for Creating Vendor Master Data → Define Screen Layout perCompany Code (Vendors)

29 True



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n Once the vendor master is created and saved, it is not possible to change the vendor group assignment.

n If you use both FI-AP and MM modules it is better to maintain the vendor master data centrally, so you can minimize the risk of missinginformation.

n You can run transaction code: S_ALR_87010052 to find out the missing vendor master record.

n To restrain the user from creating duplicate vendor master records, you can use match code and/or activate the duplicate check indicatorin the vendor master.

n In order to have good control over the vendor master record management, you can configure some fields, such as a bank account of avendor, as critical or sensitive. If anyone makes changes to these fields, the system expects that another person is responsible for

confirming these changes. This principle in SAP called in dual control principle.

n In case of dual control principle, if changes are made to a specified field, the vendor will be blocked for payment until the time ofconfirmation.

n In order to configure the dual control principle follow either:


Or

¡ R/3 IMG Men u: Implementation Guide (IMG) Financial Accounting → Accounts Payable Accounts Receivable→ Vendor

Accounts→ Master Data→ Preparations for Creating Vendor Master Data → Define Sensitive Fields for Dual Control (Vendors)

n You can confirm these changes either individually or collectively through the list function. To confirm individually follow either:

¡ Transact ion Code : FK08

Or

¡ R/3 IMG Men u : Accounting→ Financial Accounting→ Accounts Payable→ Master Records → Confirmation of Change→

Single

Or

•mySA P ERP IMG Menu:

n To confirm multiple vendors follow either:

¡ Transact ion Code : FK09

Or

¡ R/3 IMG Men u : Accounting→ Financial Accounting→ Accounts Payable→ Master Records → Confirmation of Change→ List

Or

•mySA P ERP IMG Menu

n Now you will come to know some of important fields and functions of vendor masters.

Answers

30 Question – 30

The vendor master contains following views at

A. General data

B. Company code data

C. Purchasing organization data

D. All of the above

?

30 D

31 Question – 31

You can create a vendor master A. Centrally .

?



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Answers

2.4.5 The Vendor is Also a Customer

n A business partner who is supplying material and services is called the vendor. A business partner who is procuring goods and services iscalled the customer. In a given situation, a vendor may also be procuring goods and services from the entity to which it is supplyingmaterial. In SAP, the FI module vendor and customer are treated separately and you need to maintain separate master records: a vendormaster record and a customer master record for the same business partner.

n It is obvious that you will give or receive payment to or from your business partner after taking into consideration what you are paying to thevendor and your business partner is paying you.

n In order to clear vendor's open item against a customer, or a customer's open item with a vendor, you need to carry out following additionalsteps:

¡ Enter customer number in vendor master and vice versa

¡ Select the field "clearing with vendor" in the vendor account or the corresponding field in the customer account

Figure 2.32: T.Code: FK02 vendor and customer.

n Figure 2.32 depicts a vendor master record control tab page of company segment data, where you can assign a customer number. If youare not seeing this field in the vendor master record, check your configuration in T.CodeOBD3, OB24, OB25.

B. In the MM module only

C. In the FI module only

D. All of the above

31 D



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Figure 2.33: Vendor master record control tab page of company segment data.

n To know this partner relationship executes the Transaction Code S_ALR_ 87101120. This report depicts vendor and customerrelationship.

2.4.6 Alternative Payee

n Alternative payee is a business partner to whom you are directed to pay on behalf of others. This type of situation arises in the followingsituations:

¡ When your supplier or service provider directs you to pay another business partner on behalf of the supplier.

¡ When your business partner's business or property is subject to court attachment. In this case, you need to pay to the court instead ofthe supplier.

n SAP offers the following options with regards to alternative payee:

¡ Alternative payee

¡ Alternative payee in document

¡ Permitted payee

n Alternative Payee: In the vendor master record you will find the alternative payee field on the general data-payment transaction screen andthe company code data-specific payment screen. Alternative payee in the company code segment has priority over the general data

segment. Figure 2.34 depicts the alternative payee field of the vender master.



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Figure 2.34: XK02-General data-alternative payee.

n In this option, you need to first create an alternative payee master as vendor and in the subsequent step you assign an alternative payeevendor master to the vendor master.

n Alternative payee in document: This option is general data – payment transaction as shown in Figure 2.35. If you choose this option, thesystem allows you to enter alternative payee information while entering the transaction. This option is similar to entering vendor masterinformation, such as a one-time vendor.

Figure 2.35: XK02 Company code segment-alternative payee.

n In order to avail this functionality, you need to check the "individual spec" check box in the vendor master. Once "individual spec" ischecked, you will find an additional check box "individual payee" while entering transaction. In order to enter alternative payee information,you need to check the "individual payee" box. Once it is checked, the system will come up with an "address and bank data" pop-upwindow, where you can enter the alternate payee information.

n Permitted payee: In this option, you can assign multiple permitted payees to a vendor. First, create all permitted payee as vendors andthen assign these alternative payees to vendor master. This option allows the assignment of multiple permitted payees to the samevendor.

n If you assign multiple alternative payees to vendor master, the system allows you to choose a payee from the permitted list while entering atransaction.

n Figure 2.37 depicts the vendor master where you can assign multiple permitted payees.



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Figure 2.36: FB60-Alternate payee document.

Figure 2.37: XK02-Permitted payee at general data.



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Figure 2.38: XK02-Permitted payee at company code data.

n You can see vendor and alternative relations through the following options and choose "Payment Data" in the selection screen.


Or

¡ SAP Menu : SAP menu→ Information Systems→ Accounting→ Financial Accounting→ Accounts Payable→ Reports for

Accounts Payable Accounting→ Master Data→ Vendor List

Or

¡ mySA P ERP IMG Menu

n The effect of alternative payee is that payment will be remitted to the alternative payee by clearing open items of the vendors.

2.4.7 Head Office and Branch Accounts

n You may encounter a situation where your supplier has multiple branches responsible for supplying materials or services, and the headoffice is responsible for all other activities. This situation also arises when your supplier has a shared service concept.



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Figure 2.39: Head office and branch account.

n In this situation, you need to create two vendor masters: one for the branch that supplies materials or services and another for the headoffice vendor. In the subsequent step, you need to link the head office account by entering the head office vendor number in the branchmaster record.

n Figure 2.40 depicts the head office field in the company code data and the accounting information account tab pages of the vendormaster.

n Once you assign the head office vendor account to the branch office vendor master, all items posted to the branch account areautomatically transferred to the head office account.

Figure 2.40: XK02-company code data-head office account.

n Invoke either of the following options and choose "additional selections" to display the branch and head office relation:


Or

¡

SAP Menu : SAP menu→

Information Systems→

Accounting→

Financial Accounting→

Accounts Payable→

Reports for Accounts Payable Accounting→ Master Data→ Vendor List



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2.4.8 Terms of Payment

n Payment term represents an agreement between business partners for payment of invoices and related cash discount terms.

n In payment term configurations you define:

¡ The reference date (base line date) from which date the system starts counting the due date

¡ Calculation of due date

¡ What would be the cash discount percentage if the customer makes remittance before due date

n SAP system comes with few pre-delivered payment terms, however, you can define your own through either:

¡ Transact ion Code : OBB8

Or

¡ R/3 IMG Men u : Implementation Guide (IMG) → Financial Accounting→ Accounts Receivable and Accounts Payable →

Business Transactions→ Incoming Invoices/Credit Memos → Maintain Terms of Payment

Or


Payable→

Business Transactions→

Incoming Invoices/Credit Memos→

Maintain Terms of Payment

n If you want the system to propose a payment term, then you need to assign payment terms in the customer master, however, you canoverride the system's proposed payment terms. In SAP, the application system provides functionality to enter payment terms in thecompany code segment, as well as the sales area segment.

n It is not necessary that both terms of payment should be same. The system proposes payment terms depending on the transaction'sorgins.

n If the transaction is originated from the sales and distribution module, then the system defaults the sales areas payment term in FIdocument.

n If transaction originated in FI, then the system proposes FI payment terms.

n System only proposes payment terms from the master records for invoice entries not credit or debit notes. You can broadly classifycredit/debit notes as follows:

¡ Credit/debit note related to customer invoice

¡ Credit/debit notes not related to customer invoice

n In case of credit/debit notes related to a customer invoice, then you naturally expect that the credit note should be linked to the originalinvoice. You can link a credit/debit note to the original invoice by entering the original invoice number in the invoice reference field duringthe credit/debit note entry.

n In the case of a non-invoice related credit/debit note, enter "V" in the "invoice reference" in order to activate payment terms.

n Payment terms are created at the client level and can be used by any company code. Depending on the business requirement you can usesame payment term for both customer and vendor, or you can create a one payment term for the vendor and another for the customerthrough account type maintenance in the payment term screen.

n In order to calculate payment due to date, you need a reference date, which is called base line date in SAP. SAP provides four possible

options that you need to choose while maintaining payment terms:

¡ No default

¡ Document date

¡ Posting date

¡ Entry date



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Figure 2.41: OBB8 payment terms.

n Figure 2.41 shows a pre-delivered payment term "0002." As both customer and vendor check boxes are checked, you can use thispayment term for customer as well as vendor. The document date has been selected as a base line date. If you use this payment term, thedue date will be the document date plus 45 days. If the customer pays within 14 days of the document date, the system will allow threepercent as a cash discount. However, if the customer pays 14 days after the document date and within 30 days of the document date, thesystem allow two percent as a discount.

n Through payment terms, you can also control the payment block and the default payment method.

n The SAP application provides functionality for installment payment of an invoice. In the case of installment payment, an invoice will bedivided over a period of time with different payment terms.

n The configuration of an installment payment term consists of two steps:

¡ Step 1: define the main payment terms and the installment payment terms

¡ Step 2: define installment for main payment terms and assign an installment payment terms

You can define the main payment terms as well as the installment payment terms through transaction code OBB8, while you can performStep 2 through either:

n Transact ion Code : OBB9

Or

n R/3 IMG Menu : Implementation Guide (IMG) → Financial Accounting→ Accounts Receivable and Accounts Payable→ BusinessTransactions → Incoming Invoices/Credit Memos → Define Terms of Payment for Installment Payments

Or

n mySA P ERP IMG Menu: Implementation Guide (IMG) → Financial Accounting (New) → Accounts Receivable and Accounts

Payable→ Business Transactions → Incoming Invoices/Credit Memos → Define Terms of Payment for Installment Payments

n The following few figures depict configuration of installment payment terms. Here the business requirement is that you are allowed to paysupplier invoices in three installments, as follows:

¡ Installment 1: 30% of invoice amount due within 15 days of the base line date





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Figure 2.42: OBB8 installment payment terms.

n As Figure 2.42 shows, you have created a payment term for the installment payment. In this payment term you have selected only aninstallment payment, so there is no need to set up other attributes of payment terms like cash discount or a cash discount period. You enterthis payment term in the vendor master records.

n Figures 2.43, 2.44, and 2.45 all show that you have created an additional three payment terms for your three installments. In these threepayment terms, you need to maintain the baseline date, cash discount period, and the percentage if there is any.

Figure 2.43: OBB8 Installment one payment term.



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Figure 2.44: Installment two payment terms.

n In Figure 2.43, you have configured the first installment payment terms with the document date as the baseline date. The amount due iswithin 15 days of the document date.

n In Figure 2.44, you have configured the second installment payment terms with the document date as the baseline date. The amount is duewithin 30 days from the document date.

n In Figure 2.45, you have configured the third installment payment terms with the document date as the baseline date. The amount due isdue within 45 days from the document date

n As Figure 2.46 depicts, you have assigned installment payment terms i.e. ZR01, ZR02, ZR03 to R001, and also defined what would be theinstallment percentage.



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Figure 2.45: Installment three payment terms.

Figure 2.46: OBB9 installment definition.

n When you post a vendor invoice with payment term R001, then system creates three line items for every installment, with relevant paymentterms i.e. ZR01, ZR02, and ZR03.

2.4.9 Reconciliation Accounts

n A reconciliation account represents a G/L account that contains summary information for sub-ledgers. In the SAP application, the followingFI sub-modules are treated as sub-ledgers to FI general ledger accounting (FI-GL) sub-modules:

¡ Accounts Receivables (FI-AR)

¡ Accounts Payable (FI-AP)

¡ Assets Accounting (FI-AA)

n Since reconciliation accounts are meant to hold only summary information, transactions are not posted directly.

n You assign reconciliation account to the customer and vendor master in the accounting information tab company code segment. In otherwords, reconciliation account maintenance is specific to company code.

n While creating a G/L account master record, you need to determine what type of reconciliation it is by selecting from the available optionsin the reconciliation field of control tab of chart of the account segment.

n Figure 2.47 depicts a G/L master record chart of account control data tab pages. In order to make a G/L master record a reconciliationaccount, choose a relevant account type from the available options.

n When you post the vendor invoice and debit note, you need to post to the vendor and the reconciliation account at the same time as thetransactions. In the SAP application, you may come across another kind of reconciliation account called an alternative reconciliationaccount, which will be discussed later in this section.

2.4.10 Special G/L Transactions

n The term special G/L transactions is often confused with special ledger in the SAP application. In this section, you will learn special G/Ltransactions.

n Special G/L transactions are transactions that carry special treatment in the financial statement. Normally, you deal with special G/Ltransactions in the account receivable and payable shown separately in the financial statement, such as, vendor down payments, letter ofcredit, bills of exchange, and guarantee money.



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Figure 2.47: T.Code: FS00 G/L account master records.

n When you post a transaction to a vendor with a special G/L transaction indicator, the document is posted to an alternative reconciliationaccount instead of a normal reconciliation account.

n The SAP application comes with the following pre-configured special G/L indicator, however, you can create your own special G/Lindicator in customization.

¡ A: down payment on current assets

¡ B: financial assets down payment

¡ F: down payment request

¡ I: intangible asset down payment

¡ M: tangible asset down payment

¡ O: amortization down payment

n To meet your business needs, you can create new special G/L indicators through either:

¡ Transact ion Code : OBYR

Or

¡ R/3 IMG Men u : Implementation Guide (IMG) → Financial Accounting→ Accounts Receivable and Accounts Payable → Business Transactions→ Down Payment Made→ Define Alternative Reconciliation Account for Down Payments

Or


Payable→ Business Transactions→ Down Payment Made→ Define Alternative Reconciliation Account for Down Payments

n In the above configuration steps, you assign an alternative reconciliation account to a normal reconciliation account based on special G/Lindicator. This relation between alternative reconciliation account and normal reconciliation account determines which alternativereconciliation account will be posted (Figure 2.47).



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Figure 2.48: Alternative reconciliation account assignment.

n Due to the special nature of business processes and different screen layouts, special G/L transactions are categorized into threecategories: down payment related transactions, transactions related to bills of exchange, and others transactions.

n In special G/L transactions, you can see three types of transactions: automatic offsetting entries, noted items, and free offsetting entries.

n Automatic offsetting entries: We use this function to attain a balanced financial statement. Examples of these types of transactions arebank guarantees and bills of exchange. These types of entries are used for statistical purposes and used in financial statement as a note

to financial statement. You can configure automatic offsetting entries through either:

¡ Transact ion Code : OBX3

Or


Business Transactions→ Postings with Alternative Reconciliation Account → Other Special G/L Transactions → Define Accounts

for Automatic Offsetting Entry

Or


Payable→ Business Transactions→ Postings with Alternative Reconciliation Account → Other Special G/L Transactions→

Define Accounts for Automatic Offsetting Entry

n Noted items: Noted items are generally used to remind the user community of expected transactions. These are single line documents thatdo not post to G/L accounts. In other words the G/L balance doesn't get affected by this type of transaction. In the case of noted items, thesystem doesn't validate a zero balance check, such as own payment requests and bills of exchange requests.

n If you want to pay down a payment through an automatic payment program, then it is a pre-requisite that you need to have a down paymentrequest. You will learn more about the down payment business process in Chapter 5.

n Free offsetting entries: Special G/L transactions are free of setting entries, other than statistical and noted item nature. Throughconfiguration, you can determine your alternative reconciliation account, such as a down payment made or payment received.

Answers

32 Question – 32

When you post special general transaction system updates in

A. Sub-ledger and reconciliation ledger

B. Sub-ledger and alternative reconciliation ledger

C. Reconciliation accounts only


?

32 B

33 Question – 33

A down payment request makes

A. A noted item posting in the vendor or customer accounts

B. An actual entry in the customer accounts

?



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Answers

2.4.11 Dual Control Principle

n You can implement dual control principle to control vendor customer master changes. Dual control principle works in a similar way in bothaccount payable and account receivable.

n In order to implement dual principle, you need to configure the fields relevant for dual principle in IMG. You can configure through either:


Or


Accounts→ Master Data→ Preparations for Creating Vendor Master Data → Define Sensitive Fields for Dual Control (Vendors)

Or


Payable→ Vendor Accounts → Master Data→ Preparations for Creating Vendor Master Data → Define Sensitive Fields for Dual

Control (Vendors)

n You can confirm the changes for a single vendor or a list of vendors. You can choose either of the options to SAP application provides:


Or

¡ SAP Menu : SAP Menu→ Information Systems→ Accounting→ Financial Accounting→ Accounts Payable→ Reports for

Accounts Payable Accounting→ Master Data→ Display/Confirm Critical Vendor Changes

Answers

Answers

C. An actual entry in the vendor accounts

D. An actual entry in the vendor and customer accounts

33 A

34 Question – 34

Non-integrated vendor invoices can be entered in

A. Financial Accounting – Accounts payable module only

B. Material management module only

C. FI-AP and MM modules

D. FI-AR, MM, and SD modules

?

34 A

35 Question – 35

The automatic payment program

A. Generates payment orders only

B. Generates payment orders and accounting transactions

C. Generates accounting transactions only


?

35 B




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Answers

2.5 Accounts Receivable (SAP FI-AR)

n Due to today's complex business environment, proper maintenance and tracking of accounts receivable is critical.

n Accounts receivable represents money owed by the customer on the sale of product and services. The accounts receivable componentrecords and administers accounting transactions with your customer. This subcomponent is an integral part of mySAP ERP Financialsand interacts with other modules or sub-components of mySAP ERP Financials, such as sales and distribution module, assetsaccounting, and general ledger.

n In the accounts receivable module you will see different types of SAP objects. Before preceding further it is important to know what arethey and what is their nature (Figure 2.49).

Figure 2.49: Accounts receivable.

2.5.1 Customer Group

n You use customer group to classify customers depending on geographical area, business segment, and product. Customer groupscontrol:

¡ Customer number range

¡ Customer master field layout

¡ Whether the customer is a onetime customer or not

n You can create or maintain a customer group through either:


Or


Customer Accounts→ Master Data→ Preparations for Creating Customer Master Data → Define Account Groups with Screen

Layout (Customers)

Or


Payable→ Customer Accounts→ Master Data→ Preparations for Creating Customer Master Data → Define Account Groups with

Screen Layout (Customers)

n The SAP application has a number of fields to capture information relating to a customer. Some of the information may be needed ordependent on geography or the product. Based on your requirements, you can create a number of customer groups. Through these

customer groups you can control customer master data fields.

n Customer master fields are controlled through account group specific field status, transaction specific field status, and company code

The system updates vendor reconciliation and alternative reconciliation periodically .

A. False

B. True

36 A

Accounts Receivable [SAP FI-AR]

Client Dependent Objects Company Code Dependent Objects

1. Customer Master – General Data

2. Payment Terms

3. Dunning Key

4. Posting Keys

5. Document Types

6. Customer Account Groups

1. Vendor Master – Company Code Data

2. Vendor Number Range

3. Document Number Ranges



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specific field status.

n Account group specific field status: Through the customer account group, you can decide whether the field can be suppressed, requiredentry, optional, or display. All customers falling under one group will have the same field status.

n Transaction based field status: Depending on which transaction code you are using, the fields can be editable or display. Transaction-based control further controls what could be a field status, when the user changes, or display mode.

n Company code specific field status: Since the customer master is a client dependent master, the SAP application provides functionalitythrough which you can control which fields are editable, displayed, or hidden, depending on the company code.

n The system checks account group specific field status, transaction specific field status, and company code specific field status, whichmeans the field status has highest priority.

Figure 2.50: SPRO-customer group.

n Figure 2.50 depicts "change view" and "customer account groups." On the details screen, if you want to create a new account group,choose "new entries." To manage the account group field specific field status, select any field status group such as "general data" andthen choose "edit field status."

2.5.2 Customer Number Range

n In SAP, the customer is identified by an ID called customer number. The customer number is unique to each the client so you cannot havethe same ID for two different customers. The customer number is controlled through the customer number range.

n Like vendor number range, the customer number can be internal or external.

¡ Internal Number Range: In the case of an internal number range system, assign the next available number while saving the customermaster data. An internal number range always in numeric format.

¡ External Number Range: External number ranges can be alpha numeric. The system does not assign customer numbers whilecreating the customer master system and expects the user to key in the customer number.

n You can create and maintain a customer number range through either:

¡ Transact ion Code : XDN1

Or


Customer Accounts→ Master Data→ Preparations for Creating Customer Master Data → Create Number Ranges for Customer

Accounts

Or



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Payable→ Customer Accounts→ Master Data→ Preparations for Creating Customer Master Data → Create Number Ranges for

Customer Accounts

n By activating the "Ext" field against number range, you can determine whether the number range is external or internal.

n In Figure 2.51 number ranges 04 and 05 are an external number range, while all other number ranges are internal. In the case of internalnumber ranges, the system updates the current number field, which shows the current number in use.

n Number ranges are assigned to a customer group. One number range can be assigned to more than one customer groups. In that case,the customer groups shares number range.

2.5.3 Customer Master Records

n In order to post a transaction to a customer, the system expects that you already have the business partner's master data. Master datacontains information relating to your business partner's name, addresses, and bank account. You need to create a customer masterrecord before any transaction takes place.

Figure 2.51: XDN1-customer number range.

n A customer master is created at the client level and the customer number is unique for each client because the customer master is usedby accounting, sales, and distribution modules. Every company code creates its own master data, just as every sales area creates an itemwon data set.

n A complete customer master record consists of the following three segments:

¡ General Data: Contains information that is specific to the client. These data are accessible in every company code residing in thesame client.

¡ Company Code Data: Company code view contains a set of data relevant to the company code. These data can't be shared withother company codes. If a company code wants to use an existing company code, it needs to extend the customer master data.

¡ Sales Area Data: Similar to company code data, sales area data or view contains information that is relevant from a sales point ofview. These data are specific to a sales organization. Every sales organization will have its own set of data.



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Figure 2.52: Customer master data. © Copyright 2012. SAP AG. All rights reserved.

¡ You can create customer master data centrally through either:

l Transact ion Code : XD01

Or

l SAP Menu : SAP Menu→ Accounting→ Financial Accounting→ Accounts Receivable→ Master Records → Maintain

Centrally → Create

¡ You can check the completeness of the customer master through either:

l Transact ion Code : S_ALR_87009973

Or

l SAP Menu : SAP Menu→ Accounting→ Financial Accounting→ Accounts Receivable→ Master Records → Maintain

Centrally → Create

¡ In SAP ERP Financials, offer two types of customer master (1) Normal Customer Master and (2) One-time Customer.

2.5.4 Normal Customer vs. One-Time Customer

n One-Time Customer : One-time customers are those customers with whom you rarely do business. A one-time customer master recorddoesn't contain any specific information to that customer. You enter customer specific information while entering transactional data.

n Normal Customer Master : Customer masters other than one time customer master records are called normal customer records. In thecase of a normal customer record, you maintain all the required information specific to that customer.

n Later in this section, you will learn about more important attributes and functionality of customer masters.

Answers

37 Question – 37

When posting to a one-time vendor or customer

A. System adopts master data information from the customer or vendor master records

B. You need not to capture customer/vendor master information

C. You enter customer/vendor information in line items


?

37 C



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2.5.5 Alternative Payer

n Like vendor master, you will find alternative payer in the customer master in general data and company code data. Alternative payer worksthe same way as alternative payee works. The only difference is that you receive money through alternative payer to pay money toalternative payee. Refer to the alternative payee section of account payable for more information.

2.5.6 Head Office and Branch Account

n The head office and branch concept has already been covered in accounts payable. The only difference is that in the account payablesection you learn about head office and branch payable functionality, and in account receivable you will deal with the head office andbranch customer. To learn more about the branch and head office concept, refer to the head office and branch section of accounts payablesection.

2.5.7 Terms of Payment

In the account payable section, you learned that the payment term can be used by both accounts payable and account receivable.Configuration, concept, and usage of payment term is similar in both accounts payable and accounts receivable.

n Refer to section 1.3.8 of account payable to learn more about payment terms and its usage.

2.5.8 Reconciliation Account

n Like accounts payable, account receivable is also a subsidiary ledger. The concept of a reconciliation account applies the same way as itapplies to accounts payable. Refer to section 1.3.9 to learn more about reconciliation account and its applicability in SAP application.

2.5.9 Special G/L Transactions

n As discussed in the account payable sections, the SAP application offers various kinds of special G/L transactions. The concept anddefinition of customer special G/L transactions is similar to accounts payable.

n You can configure special G/L transaction through either:

¡ Transact ion Code : OBXR

Or


Business Transactions→ Down Payment Received → Define Alternative Reconciliation Account for Down Payments.

Or


Payable→ Business Transactions→ Down Payment Received → Define Alternative Reconciliation Account for Down Payments

Answers

2.5.10 Dunning

n Dunning refers to sending reminders to customers or vendors as a reminder for outstanding payment. It is sometimes called as a paymentreminder or dunning notice.

n In order to enable dunning functionality, you need to carry out a number of configuration steps. Out of these steps in the configuration ofdunning procedure is one of the most important tasks to activate the dunning functionality and is called the dunning procedure. You canreach the configuration steps by following the menu path given below:

¡ Transact ion Code : FBMP

Or

38 Question – 38

Through a down payment request you create

A. A noted item with customer or vendor

B. A down payment request that updates customer balance

C. Down payment request that updates alternative reconciliation account

?

38 A



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Business Transactions→ Dunning→ Dunning Procedure→ Define Dunning Procedures

Or,


Payable→ Business Transactions→ Dunning → Dunning Procedure→ Define Dunning Procedures

n Dunning program selects overdue open items of the business partners and determines the dunning level. Based on the dunning level, thesystem determines a dunning letter that could be sent out.

n In the dunning functionality you use the following new objects or terminologies:

¡ Dunning procedures: Dunning procedure contains a set of control parameters to choose open items of business partners anddetermines the dunning level, the test (dunning letter), and the threshold limit for dunning functionality. You can configure dunningprocedure through transaction code FBMP. You need to assign dunning procedure to the customer master. Figure 2.53 depicts thestandard dunning procedure delivered by SAP. In the figure, the title bar shows multiple options for configuration of differentfunctionalities or attributes of the dunning procedure. For example:

Figure 2.53: Dunning procedure.

¡ Dunning levels: The dunning level determines how many times you want send dunning letters. Based on the dunning interval, thesystem calculates the due date for sending out dunning letters.

¡ Dunning areas: The dunning area is an organizational unit within a company code. You assign a dunning area to your businesspartner. You can assign a dunning area to multiple customers but a customer can have only one dunning area in a given point of time.

n Figure 2.54 depicts the correspondence tab of customer master data. You can see the field for dunning procedure assignment. If youchoose the dunning area button, you can assign the dunning area.

– How often you want to send dunning letters? The number of days that you enter in the dunning interval determines how often you want to dun your

business partner.

– How many times do you want to send dunning letters? The number of dunning levels determines how many times you send dunning letters.

– If you choose "Dunning Texts" you can assign a dunning letter script based on the dunning levels. – If you choose "Minimum Amount" you can configure the thresh hold limit for sending a dunning notice.



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Figure 2.54: Dunning area assignment to customer master.

n You can run the dunning program through either the batch process or manually. You can manually run a dunning program by using thefollowing menu path:

¡ Transact ion Code : F150

Or

¡ R/3 SAP Menu : Accounting→ Accounts Receivable → Periodic Processing→ F150 – Dunning

n When you run a dunning program, the system creates a dunning proposal. Once the system creates the dunning proposal you can:

¡ Set a dunning block

¡ Reset a dunning block

¡ Change dunning level

n Once the dunning notice is printed, the system updates the business partner's master data with the dunning date and dunning levels.

Answers

2.5.11 Dual Control Principle

n In order to prevent unauthorized changes, you can implement the dual control principle provided by the SAP application. In dual control

principle, you can configure certain fields in the customer master as sensitive. If changes are made to these fields, someone other than theperson who made changes needs to confirm the change. Dual principle is equally applicable to vendor master.

39 Question – 39

When you execute the dunning program, the system generates

A. Dunning letters only

B. Dunning letters as well as system updates general ledgers balances

C. System post interest and expenses that you have configured in dunning procedures


?

39 A



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n In order to implement dual principle, you need to configure fields relevant for dual principle in IMG. You can configure through either:


Or


Customer Accounts→ Master Data→ Preparations for Creating Customer Master Data → Define Sensitive Fields for Dual

Control (Customers) Or


Payable→ Customer Accounts→ Master Data→ Preparations for Creating Customer Master Data → Define Sensitive Fields for

Dual Control (Customers)

Figure 2.55: SPRO-dual control configuration.

n Figure 2.55 depicts the configuration screen of dual control principle. In this case, you have defined the payment term as a sensitive field.The SAP application provides number fields to those that can be defined for dual control principle.

n If you change the sensitive fields, the customer master is blocked for payment. The system removes the payment block once the changesare confirmed by someone other than the person who made the changes.

n You can confirm the changes for a single customer or a list of customers. You can choose either of the options the SAP applicationprovides:


Or

¡ SAP Menu : SAP Menu→ Information Systems→ Accounting→ Financial Accounting→ Accounts Receivable→ Reports for

Accounts Receivable Accounting → Master Data→ Display/Confirm Critical Customer Changes

2.5.12 Over Payment/Under Payment

n Payment differences generally arises while clearing if a customer has made an under payment or overpayment.

n Normally underpayment arises under the following circumstances:

¡ The customer has made an unauthorized deduction for cash discount

¡ The customer has some concern over the quality of the material

¡ Shipment got delayed

n While processing incoming payments or clearing customer open items, the system checks tolerance groups assigned to user concerns(employee tolerance) and customer tolerance groups.

n You can categorize customer underpayment into two categories: authorized deduction and unauthorized deduction.

n Authorized deductions are those deductions that are within the customer tolerance limit. Based on the customer tolerance groupconfiguration, the system either determines an allowable cash discount and posts a cash discount to a G/L account or posts to anoverpayment/ under payment account to charge as revue or expenses.

n Unauthorized deductions are deductions that have not been agreed upon. Unauthorized deductions may be either a material amount orimmaterial amount.



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n If the unauthorized deduction is immaterial, then it can be processed automatically by adjusting the cash discount amount. However, thesecash discounts should be within the permitted limit of employee tolerances.

n Material unauthorized deductions can be treated in either of the following ways:

¡ As a partial payment

¡ As a residual payment

n Partial Payment : A material unauthorized deduction may be posted to a customer account as a partial payment. A partial payment doesn'tclear any open customer items, including incoming payments on all open items. These open items can be cleared by an other incomingpayment or credit note.

Figure 2.56: Outgoing payment difference. © Copyright 2012. SAP AG. All rights reserved.

n Residual Payment : A residual payment clears customer open items and creates a new open item under paid amount. A new open iteminherit the payment terms and line item attributes from the original line item.

2.5.13 The Customer is also a Vendor

n In your day to day business, you may be dealing with an entity who is purchasing product from you as well as selling product to you. As theSAP application has a demarcation between vendor and customer master records, you need to create two separate master data: one forthe customer and another for vendor master records.

n Transactions posted to customers are recorded in customer ledgers in the same way transactions posted to vendors are recorded in thevendor ledger. Now you must be looking for functionality when you offset the vendor balance with the customer and vice versa.

n To offset customer balance with the vendor you need to meet following two requirements:

¡ Assign vendor master in the customer master record in the control tab of general data

¡ Activate "clearing with vendor" in the company code data and payment transaction tab pages



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Figure 2.57: FD03-customer master control data.

n Like the vendor master, in the customer master you need to key in the vendor number in the company code data and control tab of thecustomer master record as shown in Figure 2.57. In the company code data – payment transaction tab check the box "clearing withvendor," as seen in Figure 2.58.

Figure 2.58: Customer master-company code data.

40 Question – 40

Base line date should always one of the following: document date, posting date and entry date.

?



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Answers

2.6 Assets Management (SAP ® FI-AM)

n Assets accounting is used for managing and supervising fixed assets. Assets accounting is sometimes called assets management and ispart of the SAP's core financial accounting module. Similar to the accounts payable and accounts receivable modules, assets accountingmodule is treated as a subsidiary ledger in financial accounting.

n Due to SAP's integrated approach, assets accounting modules talk to accounts payable, the accounts receivable component of financialaccounting, and material management.

Figure 2.59: Assets Management in SAP © Copyright 2012. SAP AG. All rights reserved.

n The assets accounting module takes care of the entire life cycle of an asset starting with acquisition of an asset, its wear and tear,improvements, a retirement assets, scrap, and transfers.

n With the assets accounting module you can also manage assets under contraction and lease assets.

n The assets accounting component of SAP ERP financials uses various new objects to manage assets. In the following section, you willcome to know these new objects.

2.6.1 Chart of Depreciation

n Chart of depreciation is the index of the depreciation area. In order to comply with various legal and statutory requirements, you need tomanage your assets in different ways, such as providing deprecation and valuation.

n SAP has provided country specific template chart of depreciation for most countries. All company codes within a country can use thesame chart of depreciation. Chart of deprecation is not company code specific.

n In a chart of deprecation, you define depreciation areas for both internal and external reporting. In a chart of depreciation, you can createand maintain up to 99 depreciation areas.

n You can't use the SAP provided chart of deprecation as it is. To use these templates you need to copy it into a different name.

n You can reach the chart of depreciation configuration screen by navigating the following menu path:

A. True

B. False

40 B



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¡ SAP IMG Menu : Financial Accounting→ Asset Accounting→ Organizational Structures→ Copy Reference Chart of

Depreciation/Depreciation Areas→ Copy Reference Chart of Depreciation

n Figure 2.60 shows the SAP provided chart of depreciation template 1US for the United States of America. In the case of bookdepreciation areas 1, option 1 is selected, which means this depreciation area posts to the general ledger account. In the column "TargetGroup," you can assign the ledger group (in case of the SAP general ledger).

n After copying from the SAP given template, you can add and delete depreciation areas. Once your chart of depreciation is ready, you

need to assign your chart of depreciation to your company code. You can assign your newly created chart of depreciation to companycode by using the following menu path:

¡ SAP IMG Menu : Financial Accounting→ Asset Accounting→ Organizational Structures→ Copy Reference Chart of

Depreciation/Depreciation Areas→ Assign Chart of Depreciation to Company Code

n You can assign a chart of depreciation to N number of company codes, while a company code can have only one chart of depreciation. Assignment of CoA is independent from the assignment of the chart of depreciation. For example, while company code A and companycode B are using the same CoA, they can use two separate charts of depreciation.

Figure 2.60: Chart of depreciation 1US template.

2.6.2 Assets Master Data

n You can organize your fixed assets in various levels based on your reporting requirements. You can group together various components of

assets under main assets. For example, keyboard, mouse, and PC can be grouped under "desktop" as main assets, and individuallyrecognized as sub-assets. Furthermore, all desktops can be grouped under an assets class called workstations. Workstations andlaptops can be grouped as computers for the balance sheet. Mainly, assets are structured under assets level, such as group assets, mainassets, and sub –assets; account determination level such as building, plant and machinery, and furniture fixture; and general ledger level,keeping in mind the reporting requirement.

n Like customer master records and vendor master records, you use assets master record to track asset-related transactions.

n When you create an assets master record, you select the assets class. Assets class determines various important default values and fieldlayout of the assets master record.

n You can create an assets master record through either of the following navigation options:

¡ SAP Menu: Accounting→ Financial Accounting→ Organizational Structures→ Fixed Assets→ Asset→ Create→ Asset

¡ Transact ion Code: AS01

n You assign controlling objects in the assets master. When you post transactions and run period end activities, the system determines thecontrolling objects to be posted with the transactions based on cost object assignment in the assets master records.



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2.6.3 Assets Classes

n You can group assets with similar attributes under an assets class. In mySAP ERP Financials you can create as many assets classes asyou want. Asset classes are client specific, which means any company codes within a client can use asset class. SAP comes with a fewpre-delivered assets classes. If you need more asset classes, you can create them by navigating the following menu path:

¡ SAP IMG Menu: Financial Accounting→ Asset Accounting→ Organizational Structures→ Asset Classes → Define Asset

Classes

Figure 2.61: Assets class.

n Once you double click on the any of the assets class, the system will bring up the following screen where you can set up the attributes.

Figure 2.62: Attributes of assets class.

n Figure 2.62 depicts attributes of assets class where you can assign the account determination key and the assets number range.

n If you want to structure your assets class based on general ledger, you need to use the following menu path:

¡ SAP IMG Menu: Financial Accounting→ Asset Accounting→ Organizational Structures→ Asset Classes → Generate Asset

Classes from G/L Accounts (1 to 1)

n Assets class controls the following attributes of an assets master: screen layout of assets master records, number range of assets, masterdata maintenance level, account determination for transactions, and valuation areas at chart of depreciation level.

n Asset SAP allows you to copy assets class attributes to assets and subassets, it is best practice maintain any default values in the assetsclass so that you can reduce data maintenance at the assets and sub-assets level.

n When you create an asset, you always need to select an asset class in the initial screen.

2.6.4 Assets Number Range



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n In assets class you assign assets number range ID. Assets number ranges works in the same way as the other number ranges you havestudied so far. Asset number ranges can be internal or external. In the case of internal number range, the system assigns an asset numberfrom the number range assigned to assets class, while external number range system expects that the user will key a number out of anassigned number range. See Figure 2.58.

n Assets number ranges are company code specific. You can create and maintain asset number ranges by using the following menu path:

¡ SAP IMG Menu: Financial Accounting→ Asset Accounting→ Organizational Structures→ Asset Classes → Define Number

Range Interval

Figure 2.63: Assets number range.

n Sub-assets master uses an additional suffix number to the main asset. In the standard functionality you do not need to create the subassets number range. If you have not checked the "External sub-no" check box in the asset class (Figure 2.57), the system assigns a twocharacter number after the main asset number. If you have checked the "External sub-no" check box, the system expect that you will add atwo character numeric number.

2.6.5 Group Assets

n Normally assets and sub-assets are evaluated and depreciated individually within assets management, but in some cases, to comply withlegal or statutory requirements, you need to depreciate assets as a group. In these circumstances, you create another new SAP objectcalled asset group. Like assets master record, you need to create a group asset master and design its layout through screen layoutcontrol. You can create group asset master record by using the following navigation options:

¡ SAP Menu: Accounting→ Fixed Assets→ Asset→ Create→ Group Asset

¡ Transact ion Code: AS21

n A group asset can have up to 9,999 sub-numbers. While creating group assets, you need to select an assets class.

n You assign an asset master data to group assets by keying in the group assets master ID in the depreciation areas of the asset masterdata.

n You cannot post a transaction directly to group assets. When you post to an asset, the system duplicates transactional data for groupasset.

2.6.6 Low Value Assets (LVA)

n Low value assets are special types of assets and need special configuration. Normally low value assets are those assets whose moneyvalue of these assets is very nominal. Determination of low values depends on business practice and legal requirement. Low value assetsare generally depreciated in the year of purchase. In order to have special treatment, you need to configure special assets class, threshold

limit for LVA, and a deprecation key. SAP has provided deprecation key "GWG" which depreciate assets fully in the year of acquisition.You can configure the thresh hold limit by navigating the following menu path:

¡ SAP IMG Menu: Financial Accounting→ Asset Accounting→ Valuation→ Amount Specifications (Company Code/Depreciation



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Area)→ Specify Amount for Low Value Assets

Figure 2.64: Amount for low value assets.

n Figure 2.64 depicts a low value threshold limit. This configuration is company code dependent and in this screen you can see low valuethreshold limit per deprecation areas.

n At assets class level you configure how the system will determine the low value. SAP has provided two type checks: individual check and

quantity check. In the case of individual check while posting, the APC systems compares the APC cost with the LVA threshold limit. In thecase of quantity check , the system divides the total APC value with number of assets and compares the result with the LVA thresh holdlimit. You can configure the value check determination by navigating the following menu path:

¡ SAP IMG Menu: Financial Accounting→ Asset Accounting→ Valuation→ Amount Specifications (Company Code/Depreciation

Area)→ Specify LVA Asset Classes

n Figure 2.65 depicts a low value check at assets class level and the available options. This check is at chart of deprecation and assetsclass level is not specific to any company code.

2.6.7 Assets Under Construction (AUC)

n Assets under construction are another kind of special assets class. From a business practice and legal point of view you show AUCseparately in our financial statement. Due to the special treatment, you normally create a special assets class and account determinationfor assets under construction. SAP facilitates the capture of the AUC value in two ways: individual management and collective

management. Under individual management you create separate master data for each AUC and collect relevant cost. In case of

collective management , you create a single master data for AUCs and during settlement you distribute these collective costs based oncertain allocation methods. Normally, you don't provide deprecation on AUC. SAP has provided a depreciation key 000 which doesn'tdepreciate assets.

Figure 2.65: Low value check at assets class level.

2.6.8 Leased Assets

n Lease assets are another kind of special assets. Depending on the lease terms, assets either remains property of the lessor ormanufacturer and are treated differently in your financial statement. From an accounting point of view, a lease can be classified into two

categories: operating lease, and financial lease. In the case of a financial lease you capitalize assets after excluding interest portion, whilein the case of an operating lease you don't capitalize assets, and instead show lease installment as a finance charge.



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2.6.9 Account Determination

n Account determination is a key that forms a bridge between assets class and assets general ledger account. In assets class, you assignan account determination key. In account determination you assign a general ledger to the account determination key.

n You can assign multiple assets class to a single account determination key and a single general ledger to one or more accountdetermination keys.

Figure 2.66: Assignment of account determination key to assets master.

n When you do acquisition, retirement, and depreciation posting, the system determines a correct general ledger account based on accountdetermination configuration. In real-time, the system updates one depreciation area, while through period end activity (deprecation postingrun) you can update other depreciation areas.

n The system determines the correct general account based on following objects. You assign general ledger account based on chart ofaccount, chart of deprecation, account determination key, and depreciation areas:

¡ Company code: When you are entering transactions you are entering company code

¡ Chart of depreciation: Once the company code is determined by the system, the system derives an associated chart of depreciationassigned to the company code

¡ Chart of account : You assign a chart of account to a company code based on company code information and the system-derivedassigned chart of account.

¡ Account determination key : When you create assets, you create it under an assets class. The system derives account determinationthat you have assigned to assets class.

¡ Depreciation area: You create depreciation areas in the chart of depreciation, based on chart of depreciation, while the systemdetermines which depreciations are relevant for posting.

n You can reach account determination configuration screen by using the following menu path:



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Figure 2.67: Balance sheet account determination.

¡ SAP IMG Menu: Financial Accounting→ Asset Accounting→ Integration with the General Ledger→ Assign G/L Accounts

n Figure 2.67 depicts balance sheet account determination. In the top of the screen, you can see a chart of deprecation, chart of account,account determination key, and deprecation area. The system looks for a unique combination of these objects. Once it finds thiscombination, based on transaction type, the system determines what general ledger account with which it will be posted.

n Assets accounting uses transaction type for classification of business transaction. Transaction types help in the account determinationprocess to identify appropriate G/L accounts.

2.6.10 Depreciation Areas

n Chart of depreciation contains list of depreciations areas that you are going to use in one or more assets. Different depreciation areashold different parameter keys for the calculation of depreciation. For example, one is used for tax purpose, and another used for bookpurposes.

n After production start of the system, you can add new depreciation areas and add existing assets to new depreciation area; however,SAP recommends that you create all depreciation areas before putting the system into production.

n You can create and delete depreciation areas by using the following menu path:

¡ SAP IMG Menu: Financial Accounting→ Asset Accounting→ Valuation→ Depreciation Areas → Define Depreciation Areas

n In a chart of depreciation, you can manage up to 99 different depreciation areas. In asset class or in asset master, you maintaindepreciation-area specific parameters. You can also activate or deactivate any specific depreciation area at assets class or assets level.You can reach this configuration screen by using the following menu path:

¡ SAP IMG Menu: Financial Accounting→ Asset Accounting→ Valuation→ Determine Depreciation Areas in the Asset Class

n Figure 2.68 depicts deprecation area 01 specific values in assets class 1,000. In this screen, you can also maintain the default valuessuch as minimum life of the assets, maximum life of the assets, and depreciation keys. The Area check box indicates whether thedeprecation area is active or not. If it is checked, it indicates depreciation areas to activate in assets class level.



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Figure 2.68: Depreciation area specific default values.

n In this configuration, step you also assign depreciation areas specific screen layout. Deprecation areas screen layout controls what fieldsare allowed for input and maintenance level of deprecation areas specific values.

n The values of assets are determined in depreciation areas. While posting a transaction, sometimes you need to calculate a new value

based on determined value. You can do so through derived depreciation.

n In the case of derived depreciation areas, the system applies a mathematical formula on the determined value of other depreciation areas(maximum four depreciation areas) to determine a new value.

n The depreciation area which posts to the general ledger is normally called book depreciation area, which generally carries values forpreparation of the financial statement. Book depreciation has some special significances compared to other depreciation areas:

¡ Book deprecation area updates general ledger in real-time

¡ It doesn't adopt values from other depreciation areas, but is used as reference for other depreciation areas

¡ The currency book depreciation area should always be the same as the company code currency

¡ You must have account determination configuration for book depreciation area

¡ You can't delete this deprecation area

n If you are working in a multi-currency environment, you may come across a situation when different company codes operate under differentcurrencies. In those circumstances, you use group currency for smoother consolidation, and in assets accounting you need have an

additional deprecation area called group deprecation area. To maintain group deprecation area ingroup currency, you need to assign agroup currency key to deprecation area.

Figure 2.69: Determination of deprectaion areas other than company code currency.

n Figure 2.69 depicts deprecation areas of company code 2,000. Company code currency of a company code is GBP. For consolidation



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purposes, the company code has created an additional deprecation area in USD. You can reach this configuration screen by using thefollowing menu path:

¡ SAP IMG Menu: Financial Accounting→ Asset Accounting→ Valuation Currencies → Define Depreciation Areas for Foreign

Currencies

2.6.11 Depreciation Key

n Depreciation key contains five depreciation methods that control the calculation of depreciation and imputed interest amount fordeprecation areas. These calculation methods are: base method, declining balance method, maximum amount method, multi-levelmethod, and period control method. You can create a deprecation key by using the following navigation path:

¡ SAP IMG Menu: Financial Accounting→ Asset Accounting→ Depreciation→ Valuation Methods → Depreciation Key Maintain

→ Depreciation Key

Figure 2.70: Deprectaion keys.

n If you double click any of the deprecation key, the system will come up with the screen shown in Figure 2.71. It relates to attributes ofdeprecation key LINR. In short, deprecation key LINR is used for storing line deprecation, or deprecation amount = (APC cost – scrapvalue)/ number of useful year.

Figure 2.71: Deprectaion key attributes.

n Figure 2.71 shows two phase of deprecation calculations. The first row or phase is valid for the first five years (refer to column named "C");while the second row is valid from sixth year onwards.

n Beside calculation method, deprecation keys contain what would be the scrap value of assets after the useful life of the assets, whether ornot the depreciation rate will remain constant or changes during the life of the assets.



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2.6.12 Depreciation Methods

n Depreciation methods provide a base for the calculation of deprecation. First, you need to maintain each calculation method separatelyand then assign all five calculation methods to a deprecation key. Base method is a chart of deprecation independent object and othercalculation methods are charts of deprecation dependents. You can assign one calculation method to each different deprecation key.

n SAP comes with few default calculation methods, but if a default calculation method does not fit your requirement you can create your owncalculation methods by copying from the standard one.

n Base Method : Base method contains general control-following parameters required for the calculation of deprecation. Base method is aclient-dependent calculation method and can be used by more than one chart of deprecation. Base method controls or determines:

¡ Type of deprecation

¡ Deprecation calculation methods;

¡ Treatment of the end of deprecation

n You can reach configuration screen by using the following menu path:

¡ SAP IMG Menu: Financial Accounting→ Asset Accounting→ Depreciation→ Valuation Methods → Depreciation Key→

Calculation Methods → Define Base Methods

n Declining Balance Method : Diminishing deprecation includes both the declining balance method and the sum of the year digits method. Indeclining balance method, the system calculates depreciation by multiplying factor with the rate of deprecation derived from useful life ofassets. You can reach the configuration screen by using the following menu path:


Calculation Methods → Define Declining-Balance Methods

n Maximum Amount Method : In the maximum method you specify the maximum amount the system should calculate up to until a certaincalendar date. You can reach the configuration screen by using the following menu path:


Calculation Methods → Define Maximum Amount Methods

n Multi-Level Method : You use multi-level method to provide deprecation based on percentage. Here you can specify rates of deprecationin percentage based on time, by defining the validity date. You can reach configuration screen by using the following menu path:


Calculation Methods → Define Multi-Level Methods

n Period Control Method : Period control method determines what the deprecation would be in the initial year of assets acquisition, addition,improvement, and what would be deprecation on the end date of assets transactions. You can reach the configuration screen by using thefollowing menu path:


Calculation Methods → Maintain Period Control Methods

2.6.13 Transactional Data

n In configuration, you will determine which depreciation area will update general ledger account in real time and which depreciation areaswill be updated periodically (Figure 2.72). In real-time, the system only updates one depreciation area. In addition to real-time posting, youcan also configure whether you want to post APC (Acquisition Production Cost) only, depreciation value only, or both for other deprecationareas. You can reach the configuration screen by using the following menu path:

¡ SAP IMG Menu: Financial Accounting→ Asset Accounting→ Integration with the General Ledger→ Define How Depreciation

Areas Post to General Ledger



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Figure 2.72: Depreciation posting rule.

n Through configuration you can also determine how the system will determine the APC and depreciation value. SAP has providedfunctionality through which you can determine the value for other deprecation areas. You can reach the configuration screen by using thefollowing menu path:

¡ SAP IMG Menu: Financial Accounting→ Asset Accounting→ Valuation→ Depreciation Areas → Specify Transfer of APC

Values

¡ SAP IMG Menu: Financial Accounting→ Asset Accounting→ Valuation→ Depreciation Areas → Specify Transfer of

Depreciation Terms

Figure 2.73: APC transfer rule.

n Figure 2.73 depicts the APC transfer rule for other deprecation areas. The figure depicts the configured deprecation area for alldeprecation, except 01 and 31 will derive value from deprecation area 01. As the book depreciation area receives real-time posting, thesystem doesn't allow any configuration.

n Figure 2.74 depicts the deprecation transfer rule for a deprecation area from other deprecation areas. In some of the deprecation areas,you have configured to transferred deprecation terms from 01, while with others you left the transfer rule blank where you felt that



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deprecation was not applicable.

Figure 2.74: Depreciation transfer rule.

n Assets account receives its posting from different components of SAP application, including: material management, accounts receivable,account payable, plan maintenance, and controlling.

n You can use the material management module for procurement cycle of an assets starting from creation of purchase requisition, goodsreceipts, and invoice verification.

n During the preceding material management transactions, the system checks the existence of master data, whether assets is a valuatedassets or not, and determines assets capitalization date.

n Assets Acquisition: After creation of assets master the first transaction in assets accounting is capitalization/purchase of an asset. Youcan capitalize/purchase an asset in a varieties of ways, including:

¡ External acquisition (Not integrated with material management): In the case of external acquisition, you are purchasing assets fromyour business partner. You can carry out this transaction in different ways: integrated acquisition with accounts payable or not anintegrated purchase. In the case of integrated purchase you update accounts payable and assets management at the same time.While in case of not integrated purchases you perform assets acquisition in two steps. You can perform external acquisitions bynavigating the following options:

¡ External acquisition (Integrated with material management): You can purchase an asset through a material management module. In

the case of integrated purchase with MM, like other material purchase processes, you generally follow the creation of purchaserequisition (Transaction code: ME51N) > creation of purchase order (Transaction code: ME211N) > posting goods receipts(Transaction code: MEGO) > posting invoice receipts (Transaction code: MIRO).

¡ Capitalizing assets under construction: Sometimes you create an asset by utilizing internal activities, such as supplying material fromthe warehouse, or by procuring a material which is used in construction process (refer assets under construction). SAP has providedvarious options to capture the costs relevant to bring the assets in question. Once the assets are completed, you can capitalize AUCsby distributing and settling to assets. You can reach the settlement or distribution functionalities by using the following navigationoptions:

¡ Subsequent purchase: Subsequent purchase represents the cost of improvement to an existing asset or cost of an add on.Subsequent purchases can be treated in following ways, depending on nature of addition:

– SAP Menu (Integrated with AP): Accounting → Financial Accounting→ Fixed Assets → Posting → Acquisition → External Acquisition→ With

Vendor (Transaction Code – F-90)

– SAP Menu (Integrated with AP): Accounting → Financial Accounting→ Fixed Assets → Posting → Acquisition → External Acquisition→ ABZON

— Acquis. w/Autom. Offsetting Entry Vendor (Transaction Code – ABZON)

– SAP Menu (Distribution): Accounting → Financial Accounting→ Fixed Assets→ Posting→ Capitalize Asset u. Const. → Distribute [Transaction

Code – AIAB] .

– SAP Menu (Distribution): Accounting → Financial Accounting→ Fixed Assets→ Posting→ Capitalize Asset u. Const. → Settle [Transaction Code

– AIBU] .



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n Based on acquisition, improvement cost, and deprecation key parameters, the system determines planned deprecation expenses for thefuture period. If your controlling area is active, you can transfer controlling planned deprecation expenses to determine planned overheadcost or planned product cost.

n Deprecation: Periodically you depreciate assets toward wear and tear of assets. Depreciation can be further categorized by planned

deprecation and unplanned deprecation. Planned deprecation can be further divided into ordinary deprecation and special deprecation.Ordinary deprecation represents planned deduction for normal wear and tear of an asset. Special deprecation represents a reduction ofan asset's value towards wear and tear for tax purpose. Deprecation, other than ordinary deprecation, is treated as unplanneddeprecation, which arises in various circumstances, such as damage, loss, or outdated technology.

n Sometimes, a situation warrants distributing depreciation expenses to more than one cost object. As assets master data doesn't facilitateassignment to multiple cost objects in the assets master, you collect deprecation expenses in a shared service cost center (a distributioncost center) and then apply controlling allocation process to distribute depreciation and interest expenses to other cost objects.

n In the period end activities, one of the most important activities in assets accounting is "running depreciation run." To carry out adeprecation run you need the following configure assets accounting components:

¡ Document type for deprecation posting

¡ Depreciation areas to be posted

¡ Rules for deprecation posting

¡ Posting process

n Document Type: SAP system comes with pre-delivered document types. When you execute deprecation posting system creates financialposting using document type that you have configured. For depreciation posting, the system expects you to assign a document type in theconfiguration steps. SAP has delivered document type "AF" for depreciation posting, which is assigned to a country template. When youcreate your own chart of deprecation with reference to a country template, the system automatically copies the document type assignment.If you want to assign different document type, you can do so through configuration by using the following menu path:

¡ SAP IMG Menu: Financial Accounting→ Asset Accounting→ Valuation Post APC Values Periodically to the General Ledger →

Specify Document Type for Periodic Posting of Asset Values

n The system expects the document type assigned for deprecation posting should have the following attributes:

¡ Assets and general ledger account types should be allowed for posting with this document type

¡ The number range of deprecation document should be an external number range

n In configuration, you decide which deprecation areas will create financial posting. While generating the financial posting, the systemchecks whether the chart of account and chart of depreciation are assigned to a company code or not. Whether or not you have assigneda deprecation document type to a company, you can reach the configuration screen to control financial posting by using the followingnavigation path:

¡ SAP IMG Menu: Financial Accounting→ Asset Accounting→ Valuation→ Valuation→ Depreciation Areas→ Define

Depreciation Areas→ Define Depreciation Areas

n Standard SAP comes with the following control indicator for posting control . You need to assign one control indicator to each depreciationarea:

n As the preceding configuration is client specific, the assignment of posting rules applies to all company code that use the chart ofdepreciation.

n Posting Rules: In posting rule configuration you determine how often you want to run a depreciation posting run. SAP has provided thefollowing depreciation posting run rules:

– Posting to a existing asset

– Posting to a sub asset

Posting to G/L Short Description

0 Area does not post

1 Area posts in real-time

2 Area posts APC and depreciation on periodic basis

3 Area posts depreciation only

4 Area posts APC directly and depreciation

5 Area posts APC only

6 Area posts only APC directly



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¡ Monthly posting

¡ Bi-monthly posting

¡ Quarterly posting

¡ Semi-annual posting

¡ Annual posting

n Whatever options you have selected, the system expects to plan deprecation as per your selection. However, you can always rununplanned deprecation to accommodate any special circumstances. You can provide deprecation and imputed cost by running adeprecation run. You can reach deprecation run functionality by choosing either of the following menu options:

¡ SAP Menu: Accounting→ Fixed Assets→ Periodic Processing→ Depreciation Run→ Execute

¡ Transact ion Code : AFAB

n Every transaction in assets accounts updates forecasted deprecation in assets management, but the system only updates the generalledger, controlling when you run periodic deprecation run.

n In special circumstances, you need to revise your forecasted deprecation for an assets or group of assets. For example, initially whilecapitalizing a desk top you have considered you will deprecate it at 20% per year. After one year of using the desktop, you realized thatdue to rapid changes in technology, the desktop will be replaced within another two years. In this circumstance, the depreciated value of

the desktop should be 33% at the end of the second year, which means in the second year you will provide 46% deprecation [33% (newrevised depreciation rate) + 13% for the last year], which may not be reasonable from a second financial statement point of view.

n To cope with this type of circumstance, SAP has provided two methods to spread extra past deprecation: catch-up method andsmoothing.

n Catch-up method : In this method, the system determined the deprecation amount as the difference between the planned deprecation upto this period – and the depreciation posted up to this period.

n Smoothing : In smoothing method, the system distributes the difference between the forecasted deprecation and deprecation alreadyprovided to the remaining posting periods.

2.6.14 Information System

n SAP has provided a series of standard reports. You can enhance these reports and build new reports to meet your reporting requirement.

You can reach the assets account information system by navigating the following menu path:

¡ SAP Menu : Accounting→ Fixed Assets → Information System → Various

¡ SAP Menu : Information Systems→ Accounting→ Financial Accounting→ Fixed Assets → Various

n Assets history sheet is one of the most important reports for the year-end and financial statement points of view.

n SAP has provided a few country-specific assets history sheets. Since the structure of assets history sheet varies from country to countryand is detected by law, if SAP-provided reports don't fit your requirement you can build your own assets history sheet.

n Creation of assets history sheet is a two-step process: create assets history sheet version and then create asset history sheet structure.You can reach assets history sheet version creation screen by using the following menu path:

¡ SAP IMG Menu : Financial Accounting→ Asset Accounting→ Information System → Asset History Sheet→ Define History Sheet

Versions

n Once you have created assets history sheet version, you create layout structure by defining rows and columns by choosing the detail"icon." In assets history sheet, the system uses history sheet group and transaction type to plot assets opening balance, transactions,deprecations, retirements, and closing balance.

n Asset explorer is one of the most important display reports in assets accounting. This report display all related objects and transactions inone screen. Assets explorer consists of:

¡ Header used as selection parameter, where you enter asset number, company code, and fiscal year

¡ Deprecation areas overview tree displays all applicable deprecation areas relevant to asset

¡ Objects overview tree displays assets related objects, such as vendor, purchase order number, and cost centers

¡ Tab pages displays planned and posted deprecation, allows for comparison between different deprecation areas and fiscal year

41 Question – 41

The system updates APC cost in real-time for all deprecation areas, while when you do periodic processing system updates

?



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Answers

Answers

Answers

2.7 CO Enterprise Structure (SAP ® CO)

n Controlling module is a core application component of SAP application, now called management accounting, helps management foranalysis of financial data and to make informed decisions.

n You use financial accounting to generate financial statement (i.e., balance sheet, income statement, and cash flow statement) for external

deprecation expenses.

A. True

B. False

41 B

42 Question – 42

You can post transactions to a group asset .

A. True

B. False

?

42 B

43 Question – 43

Deprecation posting reduces assets balance by crediting assets .

A. True

B. False

?

43 B

. , , .

n On the other side, management needs various control reports such as cost analysis report and cost center reports for effective control ofan organization. You use management accounting to comply with the reporting requirements of management.

n Management accounting consists of different application component, such as:

¡ Cost element accounting

¡ Cost center accounting

¡ Internal order

¡ Product cost planning

¡ Profitability analysis

¡ Profit center accounting

You will learn more about these components later in this chapter.

n Controlling areas is the basic and highest organizational unit in a management account. All the activities in cost element accounting, costcenter accounting, and internal order are happening within the controlling area. Figure 2.75 depicts the organizational hierarchy of thecontrolling area.

MANAGEMENT ACCOUNTING



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Figure 2.75: Manegement accounting organizational hierarchy.

n Within a client you can have an infinite number of controlling areas. You can create a controlling area by using the following menu path:

¡ SAP IMG Menu : Controlling→ General Controlling→ Organization→ Maintain Controlling Area

Figure 2.76: Controlling area creation.

n In order to use components of controlling areas, you need to activate these components for your controlling area. In Figure 2.76, if youselect controlling area and double click on "Activate components/control indicator" the system will take component activation screen asshown in Figure 2.77.



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Figure 2.77: Controlling area components activation.

n In Figure 2.77, you can see that SAP has provided a central place for the activation of various components of controlling. Before steppingforward in controlling, you need to ensure that you have activated the required components.

n You can assign an infinite number of company codes to a controlling area. To assign company codes to a controlling area, double click on"assignment of company code(s)." Figure 2.78 shows company code assignment to the controlling area 1,000.

n You can assign company codes to one controlling area if they fulfill the following conditions:

¡ All company codes should be using the same chart of account

¡ The number of normal posting periods should be the same for all those company codes

n Every transaction that is relevant for controlling creates a separate document for the controlling area. Like financial accounting, a

controlling area document is unique within a controlling area, which is definable through a controlling area document number (TransactionCode: KSB5). The system assigns controlling document numbers based on your configuration. You can reach the configuration screen formaintenance of the controlling area document by using the following menu path:

Figure 2.78: Company code assignment to controlling area.

¡ SAP IMG Menu: Controlling→ General Controlling→ Organization→ Maintain Number Ranges for Controlling Documents

n In controlling, you use version as a data container. You can create and maintain different versions for different planning scenarios. TheSAP application comes with pre-delivered version 0. Version 0 always holds actual data, in addition to planning data. You can reach the

configuration screen of controlling by using the following menu path:

¡ SAP IMG Menu: Controlling→ General Controlling→ Organization→ Maintain Versions



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Figure 2.79: Controlling area version management client specific.

Figure 2.80: Controlling area version management controlling area specific.

n In order to post data to a planning version, you need to activate a respective control indicator. As shown in Figure 2.79, you activatedactual and planning data and in Figure 2.58 you can maintain parameter specific to a controlling area.

n By activating the lock indicator, you can control whether posting is allowed in the version or not.

n In management accounting, you can track and record transactions in three currencies: company code currency, controlling area currency,and the currency of the cost object.

Answers

2.8 Cost Element Accounting (SAP ® CO-CEL)

n As a carrier of cost, you use the cost element accounting in controlling. All expenses and incomes that are relevant for managementaccounting are posted in management accounting using the primary cost element.

n In the SAP application, all high level cost elements are divided into two types: primary cost element or secondary cost element.

n Primary Cost Elements: Primary cost elements are those cost elements for which you have corresponding general ledger master records.You can create a primary cost element manually or through automated process. Before posting a transaction in financial accounting intoSAP, the system expects that you have created the necessary primary cost element. Depending of the usage of primary cost elements,primary cost elements are categorized as:

¡ 01: Primary costs/cost reducing revenues

¡ 03: Accrual calculation using the percentage method

¡ 04: Accrual calculation using the target=actual method

44 Question – 44

Company codes assigned to controlling areas should have same

A. Operating chart of account

B. Country chart of account

C. Group chart of account

?

44 A



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¡ 11: Revenues

¡ 12: Sales deductions

¡ 22: External settlement

¡ 90: Cost elements for balance sheet accounts in FI

n Secondary cost elements: Secondary cost elements are those cost elements that are used within management accounting for

assessment and settlement. A secondary cost element has a corresponding general ledger master records. Secondary cost elements arecategorized as:

¡ 21: Internal settlement

¡ 31: Order/project results analysis

¡ 41: Overhead

¡ 42: Assessment

¡ 43: Internal activity allocation

¡ 50: Incoming orders: sales revenue

¡ 51: Incoming orders: other revenues

¡ 52: Incoming orders: costs

¡ 61: Earned value

n You can create a primary cost element by using the following navigation options:

¡ SAP Menu : Accounting → Controlling→ Cost Element Accounting→ Master Data Cost Element→ Individual Processing→

Create Primary

¡ Transact ion Code : KA01

n When you create a primary cost element system, the checks whether a general ledger account exists in financial account. If the systemdoesn’t find a corresponding general ledger account, a message pops up. From the cost element screen you can create a general ledgermaster record and vice versa.

n You can create secondary cost elements by following the following navigation options:

¡ SAP Menu : Accounting → Controlling→ Cost Element Accounting→ Master Data Cost Element→ Individual Processing→

Create Secondary

¡ Transact ion Code : KA06

n You can group cost elements with similar attributes into a cost element group. Cost element groups facilitate: easy reporting, instead ofkeying individual cost element, you can use the cost element group; distribution; and assessment.

n When you create a cost element, it falls under a cost element category. The cost element category determines those for which you can usea cost element.

2.9 Cost Center Accounting (SAP ® CO-CCA)

n Cost center accounting is part of the overhead cost-controlling component of management account. In overhead cost controlling, you usecost centers, internal order, activity types, and statistical key figures to collect overhead relevant costs. The term overhead refers to thosecosts that are not relevant, or you can’t assign directly to any services or products.

n Cost center accounting collects all costs on the basis of the source of such cost, and helps management for further analysis of theoccurrence of such cost.

¡ In order to use cost center accounting, you need to activate the cost center accounting component in controlling. You can reach theconfiguration screen by using the following menu path:

¡ SAP IMG Menu: Controlling→ Cost Center Accounting→ Activate Cost Center Accounting in Controlling Area

2.9.1 Cost Center Group

n

When you create a controlling area, you need to name the cost center standard hierarchy. Creation of the standard hierarchy is one thepre-requisites for the creation of the cost center master. Cost center standard hierarchy is the upper most node in the cost centerhierarchy. You can build branches under the standard hierarchy by creating a node or sub-node under it.



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n You can group together cost centers with similar attributes under a cost center group. You can create a cost center group by using thefollowing navigation options:

¡ SAP Menu: Accounting → Controlling→ Cost Center Accounting→ Master Data Cost Center Group → Create

¡ Transact ion Codes: KSH1

n You can move, change, or delete cost center groups by using the following menu path:

¡ SAP Menu: Accounting → Controlling→ Cost Center Accounting→ Master Data Cost Center Group → Create

¡ Transact ion Codes: KSH2

2.9.2 Cost Center Master Data

n When you create a cost center, you assign cost center to a cost center category and a cost center group. The cost center categorycontrols the following parameters of the cost centers:

¡ Certain default values for cost centers such as lock, record quantity

¡ Allowed activity types for cost centers. You assign activity types to cost center categories

¡ Used for functional area assignment, reporting, and cost center evaluation

¡ A few examples of a cost center category are a production cost center, Service cost center, and administration cost center.

¡ You can create your own categories by using the following menu path:

l SAP Menu: Accounting → Controlling→ Cost Center Accounting → Master Data→ Cost Center→ Define Cost Center

Categories

l Transact ion Codes: OKA2

¡ You can organize your cost centers based on geography, products, responsibility, functions, or any combination of the above.

¡ You can create a cost center by using the following navigation options:

l SAP Menu: Accounting → Controlling→ Cost Center Accounting → Master Data Cost Center Cost Center→ Individual

Processing → Create

l Transact ion Codes: KS01

¡ Some of the important attributes of cost center master data include:

l Cost center master data are time dependent, which means over the period of the time you will have multiple data set representedby different time interval

l Cost center master data is company code specific. Even though you can assign multiple company codes to a controlling, costcenters always represent one company code

l You can record transactions in cost center currency, which is different from company code

¡ Figure 2.81 represents a cost center 1,000 of controlling area 1,000. You can integrate cost center accounting by assigning variousSAP objects in the cost center master data. If you navigate the control tab (Figure 2.82) of the cost center master data, you can seevarious control indicators, where you can control what data are allowed for the cost center at that particular point of time.

¡ By navigating Environment→ Where used list (Figure 2.83), you can see the usage of the cost center master data in variousfunctionalities.



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Figure 2.81: Cost center master data.

Figure 2.82: Control tab cost center master data.



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Figure 2.83: Where used list.

2.9.3 Statistical Key Figures (SKF)

n Statistical Key Figures (SKF) are used as an allocation basis while assessment, distribution, and reposting. They are the statistical datasuch as number of employees, area in square meters, etc., and have no financial impact. You use SKF generally where you didn ’t find anyother easy way to measure cost. A few examples of SKFs are number employees to allocation cost like cafeteria cost and square footageof office space to divide cost energy consumed.

n You can create SKF by using the following navigation options:

¡ SAP Menu : Create Accounting→ Controlling→ Cost Center Accounting → Master Data→ Statistical Key Figures → Individual

Processing → Create

¡ Transact ion Code: KK01

n Figure 2.84 depicts a statistical key figure master data of the controlling area 1,000. SKFs are controlling area specific. The mainattributes of SKF master are unit of measurement and SKF category.

n SKFs are divided into two categories such as total value SKF and fixed value SKF.

n Total Value SKFs are those SKFs whose value could be changed from one period to the next. When you post SKF values, these valuesare valid for the posting period only, and the system doesn ’t carry these values to future periods.

Figure 2.84: Stastistical key figure.

n Fixed value SKFs are those SKFs whose value doesn’t change, or changes very rarely, such as office space in square feet. When youpost fixed value SKFs, the system carries these values to future periods until the end of the fiscal year. However, you can overwrite thesevalues by posting SKF values.



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2.9.4 Activity Types

n Activity types represent an activity or service provided by one cost object to other objects. You use activity types to track services betweencost centers. You use activity types to allocate costs to or from one cost centers to one or more cost centers. In the allocation process,sending cost centers are credited with activity rate X with the amount of activity provided, while receiving cost centers are debited withactivity rate X amount of activity.

n

You can create an activity type by using the following navigation options:

¡ SAP Menu : Create Accounting→ Controlling→ Cost Center Accounting → Master Data→ Activity Type→ Individual Processing

→ Create

¡ Transact ion Code: KL01

Figure 2.85: Activity type master data.

¡ Figure 2.85 shows activity type 1,000 master data. Activity types are controlling area specific and valid for specific periods. Whilecreating activity types, you assign the number of SAP objects to activity type masters:

l Allowable cost center category

l Allocation cost element

l Activity type category

¡ Allocation cost element is a secondary cost element used within controlling and assigned to an activity type. While posting an activitytype you use allocation cost elements for debit/credit confirmation.

¡ By assigning cost center categories you can restrict the usage of activity types for a limited number of cost centers.

¡ When you create an activity type, the system expects that you need to assign an activity type category. SAP has provided four types ofactivity categories: manual entry and manual allocation, indirect calculation and indirect allocation, manual entryand indirect allocation,and manual entry and no allocation.

2.9.5 Periodic Allocation

n During closing, you carry out a lot of activities to prepare management reports. Cost center account is not an exception. In this section, youwill learn about the following important closing activities:

¡ Periodic allocation



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¡ Actual reposting

n Periodic allocation: During the normal business process you collect in cost centers. In the closing process, you allocate these costs rightto the cost centers. To carry out the allocation process, SAP has provided two types of allocation processes: distribution and assessment.

n You allocate cost to one cost center or a group of cost centers through user defined keys: percentage rate, amounts, and statistical keyfigures.

n Distribution: Distribution is used to allocate primary costs from one or more cost centers to one or more other cost centers. In thedistribution process, costs are debited or credited using the original cost elements.

n Assessment : Assessment works the same was as distribution works, the only difference being that in assessment process you useassessment cost element (a secondary cost element). Costs which are to be assessed are grouped together and debited and creditedunder the assessment cost element.

n Reposting: Reposting is a posting aid, used frequently to correct posting within a management account without affecting financialaccounting. There are two type of reporting: transaction based reposting and periodic reposting. Distribution reposting is used to transferprimary cost from one or more objects to one or more objects. The main difference between reposting and distribution is in the case ofdistribution the amount appears on the credit side of sending objects and the debit side of receiving objects, while in reposting, thetransaction will simply be moved from the debit side of the sending object to the debit side of the receiving objects.

n Transaction-based reposting is normally used to correct incorrect posting, while periodic reposting is used like the distribution process toallocate period end cost.

n To run either distribution or assessment or periodic reposting, you need to configure application components using the following steps:

¡ Define a cycle: a cycle is a collection of segments. Within a cycle you can create up to 999 segments. For performance reasons, SAPrecommends that you create multiple cycles with a small number of segments.

¡ Define a segment for cycle: segment refers to the grouping of sending objects (cost centers), receiving objects (cost centers orinternal orders), and division criteria (fixed amount, percentage, SKFs).

¡ Determines senders and receivers: in this segment, you define which are costs centers will send cost and receiving objects.

¡ Determine allocation methods: in this segment, you maintain how the system will distribute sending cost centers costs to receivingcost centers.

n To create allocation cycles and segments, use the following menu paths:

¡ Distr ibut ion

– SAP IMG Menu : Controlling→ Cost Center Accounting→ Actual Postings→ Period-End Closing→ Distribution→ Define

Distribution

¡ Assessment

– SAP IMG Menu : Controlling→ Cost Center Accounting→ Actual Postings→ Period-End Closing→ Assessment→

Maintain Assessment

¡ Periodic Repostin g

– SAP IMG Menu : Controlling→ Cost Center Accounting→ Actual Postings→ Period-End Closing→ Periodic Reposting →

Define Periodic Repostings

Answers

45 Question – 45

When you post an expense, the system expects……………‥

has to be assigned . A. Cost object

B. A cost and revenue object assignment

C. Revenue object assignment


?

45 A

46 Question – 46

In the distribution process, SAP groups together primary cost elements and secondary cost elements for distribution.

A. False

?



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Answers

Answers

Answers

Answers

Answers

B. True

46 A

47 Question – 47

What is the integration point between Financial Accounting (FI) and Management Account (CO)? In the distribution process,

SAP groups together primary cost elements and secondary cost elements for distribution.

A. False

B. True

?

47 A

48 Question – 48

During month end closing when we run transaction code KALC (reconciliation posting) the system groups together crossentity posting and creates a summarized posting in financial posting .

A. False

B. True

?

48 B

49 Question – 49

What is the relation between cost center(s) and company code?

A. 1 (Cost Center) : 1 (Company Code)

B. N (Cost Center) : 1 (Company Code)

C. 1 (Cost Center) : N (Company Code)

D. N (Cost Center) : N (Company Code)

?

49 B

50 Question – 50

In cost center assessment, which of the following objects can you use as receiver of the cost . A. Cost center(s)

B. Internal order(s)

C. Activity type(s)

D. Statistical key figure(s)

?

50 A,B

51 Question – 51

For allocating primary cost and secondary cost you use ________________ for allocation.

A. Assessment

?



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Answers

2.10 Internal Order (SAP ® CO-IO)

n Internal order is a flexible tool in management accounting, used for varieties of purposes. Depending on the usage of internal order, it canbe split into four categories: overhead cost orders, investment orders, accrual orders, and orders with revenue.

2.10.1 Internal Order Types

n Overhead Orders: These types of orders are used to monitor overhead costs that you are incurring for specific purposes.

n Investment Orders: You use investment orders to track costs that you have been incurring for an investment projects, such as assets underconstructions.

n Accrual Order : Accrual orders are used to accrue costs to offset the impact of uneven occurrences of cost in financial accounting, such asbonus payment for employees.

n Orders with revenue: You use these types of orders to track cost and revenue for an order.

n In order to use internal order components in a management account you need to activate the internal order component in specificcontrolling area. If you have not activated this component during the creation of the controlling area, you can activate it now by navigatingthe following menu path:

¡ SAP IMG Menu: Controlling→ Internal Orders → Activate Order Management in Controlling Area

n Figure 2.86 shows activation of internal order components for controlling area 1,000.

Figure 2.86: Activation of internal order in controlling area.

n While creating the internal order master, you need to create internal order under internal order type. Internal order types control and holdlarge amount of internal order master data attributes. Some examples are internal order number range, settlement profile, or order statusmanagement.

n You can create internal order types by using the following menu path:

¡ SAP IMG Menu: Controlling→ Internal Orders → Order Master Data→ Define Order Types

n Figure 2.87 features a SAP delivered and attributed internal order type 0100. You can see that the various attributes required for internalorder are assigned to inter order type. You can compare an internal order type with G/L account group and vendor/customer account

B. Reposting

C. Distribution

D. Settlement

51 A



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groups.

Figure 2.87: Internal order type.

2.10.2 Internal Order Category

n When you create an internal order type, you need to create it under an internal order category . Internal order categories control technicalcharacteristics of an internal order type, i.e., purpose of internal order, structure and function of an order, and the transactions you use to

process. SAP comes with the following pre-delivered order categories:

¡ 01 Internal order (controlling)

¡ 02 Accrual calculation order (controlling)

¡ 03 Model order (controlling)

¡ 04 CO production order

¡ 05 Product cost collector

¡ 06 QM order

¡ 10 PP production order

¡

20 Network

¡ 30 Maintenance order

¡ 40 Process order

¡ 50 Inspection lot

¡ 60 Personnel order

¡ 70 Shipping deadlines

n An internal order is uniquely identified within controlling through a number called an internal order number . The numbering concept on aninternal order is the same as other components of SAP, i.e., internal number range or external number range. You can create an internalorder number range by using the following menu path:

¡ SAP IMG Menu: Controlling→ Internal Orders → Order Master Data→ Define Order Types

n Figure 2.88 depicts an internal order number range. This number range screen is similar to other number ranges you have studied so far.



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Internal order number ranges are not specific to any internal order type, year, or controlling area. Once you have created an internal ordernumber range, you need to assign an internal order number range to an internal order type.

n In internal order, you use status management . Internal order status management controls business transactions that are allowed at aparticular point of time. From inception of internal order, depending on phase of internal, you need to change the internal order status. SAPcomes with pre-delivered general status management by following the order status.

Figure 2.88: Internal order number range.

n Figure 2.89 depicts the internal order 0400-Internal Order-Marketing, which comes pre delivered in the SAP system. Internal order type

0400 uses general status management. Figure 2.90 depicts the general status management attributes and business transactions allowedon each status.

n If general status management is not suitable for you, you can create your own status profile and assign it to an internal order type.

n Status Profile: You can create user status profiles and arrange the desired status profile. While creating user status profiles you need togive status numbers. By using the LOWEST and HIGHEST fields for a status you can determine what the lowest status that can bereturned to or the highest status that can be attained from that status. You can create a status profile by using the following navigationoptions:

¡ SAP IMG Menu: Controlling→ Internal Orders → Order Master Data→ Status Management→ Define Status Profiles



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Figure 2.89: Internal order type.

Figure 2.90: General status manegement.

2.10.3 Internal Order Master Data

n You use internal order master data to define attributes and assign various attributes, which you then use while posting transactions andperiod end activities.

n When creating an internal order master data, you select an internal order types. Some of the fields of internal order master are populatedwith internal order type attributes and you fill in other fields.

n You can create an internal order master data by using the following navigation options:

¡ SAP Menu: Accounting → Controlling→ Internal Orders→ Master Data→ Special Functions→ Order→ KO01 – Create

¡ Transact ion Code: KO01



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n Figure 2.91 depicts internal order number 40,000 master data. Internal order master data are divided into the following various tab pages:

¡ Assignment tab: holds various default assignments of the internal orders

Figure 2.91: Internal order master data.

¡ Control tab page: controls internal status profile, at different stages of the life cycle of internal order. The system accepts different setsof business transactions. One other important attribute you maintain here is the statistical internal order indicator, which you will learnmore about later in this chapter. Refer to Figure 2.92.

¡ Period-end closing: in the period end closing tab pages you are assigning a costing sheet, interest profile, and overhead key totransfer cost to different objects.

¡ General Data: this tab page holds historical information for information purpose.

¡ Investments: tab pages contain information for investment measures.



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Figure 2.92: Internal order master data: control tab.

n From the allocation point of view, the overhead internal orders can be divided into two types: real internal orders and statistical internalorders.

n Statistical internal orders are internal orders that are used to track cost. In the case of statistical internal orders, you can allocate cost frominternal orders to any cost center or internal order. While posting, if you are selecting a statistical internal order, the system expects a realcost object. By checking and unchecking the "statistical order" check box in the Figure 2.92, you can treat an internal as statically or real.

n Internal orders that are not statistical internal orders are real orders.

n When you post transactions to an internal order and the internal order is a statistical internal order, other cost objects get real posting. If theinternal order is a real internal order, internal order gets real posting and other cost objects get statistical posting.

n You can group together several internal orders with the same attributes in a hierarchical structure. You can build internal order hierarchy upto as many levels as you want. You can use master data groups for analysis, planning, and allocations. You can also create internal ordergroups by using the following navigation option:

¡ SAP Menu: Accounting → Controlling→ Internal Orders→ Master Data→ Order Group→ Order→ KO01 – Create



n Like other cost objects, internal orders get transactional data either from direct posting or internal allocation process. When you areposting financial data that are relevant for controlling, the system expects a cost object. The cost objects can either be internal order, costcenter, or WBS elements. You can key these cost objects or the system can derive these cost objects based on the configurations.

n You can assign cost objects (in this case, internal order) by:

¡ Assigning internal order in the cost element master data. This assignment is company code independent

¡ Assigning internal order to cost elements through transaction code: OKB9, this assignment is company code dependent

n You can reach default assignment screen by using the following menu path:

¡ SAP IMG Menu: Controlling→ Internal Orders → Actual Postings→ Settlement→ Maintain Automatic Account Assignment



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Figure 2.93: Default account assignments.

n Figure 2.93, shows a default account assignment for company code 1,000. In the figure screen you can assign cost center, internal order,or profit centers to cost elements by company codes.

n Sometimes business requires cost objects to be determined or derived from the assigned profit center. In order to accomplish thisbusiness requirement you can assign cost objects to profit centers by navigating "details per profit center" in the dialog structure as shownin Figure 2.94.

Figure 2.94: Derivation of cost objects from profit centers.

2.10.5 Internal Order Settlement

n Within overhead management, cost is posted to cost centers, internal orders, or WBS elements. During the closing activities, you allocatethese costs from cost centers to internal order, or cost centers through assessment or distribution. Similarly, after completion of purpose of

the internal order you settle (called internal order settlement) internal order costs to other internal orders, cost centers, or WBS element.

n In the settlement profile, you enter a range of control parameters for an internal order settlement. You assign settlement profile either tointernal order type or you can reference an internal order or model order. You can create a settlement profile by navigating the followingmenu path:

¡ SAP IMG Menu: Controlling→ Internal Orders → Actual Postings→ Settlement→ Maintain Settlement Profile

n Figure 2.95 shows an SAP-delivered settlement profile, what is assigned to an order type, shown in Figure 2.89. In a settlement profile youare determining:

¡ What are allowed settlement receivers for the inter order

¡ Whether settlement is allowed or not, and if allowed, what portion can be settled

¡ Document type used for settlement

¡ Document resident time



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Figure 2.95: Settlement profile.

n When an internal order is settled to general ledger accounts or fixed assets, the settlement is called external settlement . The system

creates an FI document during the settlement process, otherwise internal order settlements are called internal settlements.

n In order to settle an internal order, you need to create a settlement rule for the internal order. Settlement rules contain:settlement receivers(for example, cost centers or internal orders), settlement share (for example 10%, 20%, or 100%), and settlement types (for example,PER –periodic settlement). The settlement profile holds some of the important parameters of settlement rule; you can ’t create a settlementrule without assigning a settlement profile.

n Settlement rule is valid for a specific period, i.e., you can have different settlement rules for different periods of time. You can control a

settlement rule validity period by entering a valid date in the field of settlement rule.

n In the internal order settlement process, you use either original cost elements or settlement cost elements as a carrier of the cost. Whenyou use original cost elements the cost is debited and credited under the original cost element. If you have decided to use the settlementcost element, all sending cost will be grouped under the settlement cost element while debiting and crediting.

n The system creates a settlement document while in the settlement process, and uses unique settlement document number ranges. Youcan create a settlement document number ranges by using the following menu path:

¡ SAP IMG Menu: Controlling→ Internal Orders → Actual Postings→ Settlement→ Maintain Number Ranges for Settlement

Documents

n You can initiate internal order settle process by using the following navigation options:

¡ SAP Menu: Accounting → Controlling→ Internal Orders→ Period-End Closing → Single Functions → Settlement→ Individual

Processing


Answers

52 Question – 52

While making a financial posting, if a transaction is relevant to expenses, you are assigning a controlling objects. Which of

the following are cost objects?

A. Cost center accounting

B. Internal order

C. WBS elements

D. Profit centers

?



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Answers

Answers

In the next section, you will learn about classic profit center accounting. Later on, you will learn how classic profit center accounting is differentthan SAP general ledger profit center accounting.

2.11 Profit Center Accounting (SAP ® CO-PCA)

n Profit center accounts help you to analyze internal profit and loss in different areas or units within your company, called profit centers. Youcan structure profit centers based on products, geographic regions, function, or markets.

n Profit centers derive data that are relevant for cost and profits from different profit relevant objects materials, cost centers, orders, projects,sales orders, assets, cost objects, and profitability segments through assignment of profit centers to the relevant master data.

n In addition to flow of goods and services, you transfer selected balance sheet line items like receivable, material, and assets to treat profit

centers as an investment center. This way, you can calculate the statistics such as return on investment.

n Profit center accounts takes data from other components and represent its own way in a profit centric view. Due to SAP’s integratedsolution profit center, relevant data are automatically transferred to relevant profit centers and create additional line items for profit centeraccount point of view.

n In order to use a profit center account, you need to go through certain configuration steps.

n The first step towards configuration of profit center accounting is setting up or activating the profit center components in controlling. Youcan reach the configuration screen by using the following the navigation options:

¡ Transact ion Code : 0KE5

Or

¡ R/3 IMG Men u: Controlling→ Profit Center Accounting → Basic Settings → Controlling Area Settings → Maintain Controlling

Area Settings

52 A

53 Question – 53

You can settle an internal order to which of the following objects.

A. Internal orders

B. Cost centers

C. General ledger

D. Assets

E. All of the above

F. Non of the above

?

53 E

54 Question – 54

While posting a financial transaction you assigned a cost center and an internal (real) order. Which object will get real

postin?

A. Internal order

B. Cost center

C. Internal order and cost center

D. All of the above

E. Non of the above

?

54 A



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Figure 2.96: Profit center accounting setting.

n Figure 2.96 shows the configuration of profit center accounts at the controlling area setting. In the screen, you can see two different profitcenter accounting objects: standard hierarchy and dummy profit center.

n Standard hierarchy represents the top most nodes in the profit centers hierarchy. In Figure 2.96, you are just naming the standardhierarchy, but in the later step you can describe and create organizational hierarchy by creating profit center groups and profit centers.

n Dummy profit center is a unique profit center master data that receives all postings that were made to objects not assigned to a specificprofit center.

n By checking the "elim. of internal business" box, you can prevent the system from updating objects of the same type, which are assigned tothe same profit center, such as assessment cost centers that were assigned to same profit centers.

n In profit center accounting, you can record transactions in controlling area currency, group currency, or profit center currency. If you areselecting the last option, you need to define currency and key in the profit center local currency field.

n The system automatically stores transactions under company code currency and profit center reporting currency, however, if you want tocapture a transaction in transaction currency then you need to check the "store transaction check" box.

n The valuation dropdown box provides the options of legal view, group view, and profit center valuation to select the transfer pricing optionsavailable to be used to value material and goods movement between profit centers.

n Legal View : This valuation method is used to value the transfer of material and services among profit centers using the method used forcompany codes.

n Group View : In this method, materials and services are valued by using the group valuation approach, which is an already agreed uponamount affiliated entities.

n Profit Center Valuation: This method is used when you are using a true profit center concept. Normally, profit centers transfer goods andservices among themselves as if they are doing transaction with a external entity.

n Before creating a profit center, you need to define the structure of profit centers by creating profit center groups and sub-groups under thestandard hierarchy that was discussed earlier.

n When you create a profit center master data, you need to assign a profit center group, ensuring you are created or defined in a treestructure.

n In addition to profit center standard hierarchy , you can define two more profit center hierarchies called alternative profit center hierarchyfor reposting purposes.

n If your cost center structures are the same as profit center structure, you can create profit center hierarchy with reference to cost centerhierarchy.



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Figure 2.97: Controlling area setting for profit center account.

n Figure 2.97 shows controlling area configuration for profit center accounting. In this configuration, you are performing the following steps:

¡ Activating profit center component

¡ Assigning company codes to controlling area

¡ Defining alternative hierarchies for cost center accounting and profit center accounting

n You can reach the configuration screen by using the following menu path:

¡ R/3 IMG Men u: Controlling→ General Controlling→ Organization→ Maintain Controlling Area

2.11.1 Profit Center Master Data

n When you create a profit center master data you create it under a controlling area. While creating a master data, you define profit centernumber, profit center description, validity period, lock indicator, and assign a profit center group.

n You can create a profit center by using the following navigation options:

¡ SAP Menu: Accounting → Controlling→ Profit Center Accounting → Master Data→ Profit Center → Individual Processing→

Create

¡

Transact ion Code: KE51 n As the profit center has a validity period, you can create multiple sets of masters with respect to different validity periods.

n By locking and unlocking you can control whether the profit center is allowed for posting or not. If the profit center is locked for posting,when you try to post, the system comes up with error message.

n You can assign more than one company code to a controlling area. When you create a profit center master data by default, the system willassign profit center to all company codes. However, you can restrict profit center assignments by unchecking the check box againstcompany code as shown in Figure 2.98.

n Every change in the profit center master data is documented by the system. You can see these changes by clicking the "change docs formaster data" button in the history tab of the profit center master data, seen in Figure 2.99.



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Figure 2.98: Profit center assignment.

Figure 2.99: Profit center master data change document.

n Technically, profit centers are divided into two types of profit centers: normal profit centers and dummy profit center. In profit centerstructure, you can have an infinite number of normal profit centers and only one dummy profit center.

n For your profit center standard hierarchy, you need to create dummy profit center master data through a special transaction code providedby SAP through IMG. You can reach this special function through either of the following options:

¡ SAP IMG Menu: Controlling→ Profit Center Accounting → Master Data→ Profit Center → Create Dummy Profit Center

¡ Transact ion Code: KE59



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Figure 2.100: Dummy profit center.

n Figure 2.100 depicts the dummy profit center of controlling area 1,000. The only difference in the dummy profit center master is that theindicator dummy profit center is checked. If you are creating a profit center though other transaction codes, you will see that this check boxis grayed out and not allowed for input.

n The system automatically posts to dummy profit center when you post cost or sales to an object that is not assigned to a profit center, suchas if you are posting to a cost center and the cost center is not assigned to any profit center.

n This way, the system ensures that financial accounting is reconciled with controlling. Later on through the allocation process you cancorrect the dummy profit center posting by transferring posting to a correct profit center.

n The differences between a normal profit center and a dummy profit center are:

¡ You create a dummy profit center through a special transaction available in customizing. You can’t create a dummy profit centerthrough a normal profit center create transaction code.

¡ In the case of a normal profit center, you need to specify a validity period , while in case of the dummy center you do not specify avalidity period. It is automatically valid for the maximum validity period.

¡ You cannot copy the dummy profit center from an existing profit center.

¡ A switch identifying it as the dummy profit center is automatically set.

n SAP has provided functionality for mass maintenance of profit center master data. Generally, you use this functionality to realign profitcenter master data with your organization structure. You can reach the mass maintenance functionality by using following navigationoptions:

¡ SAP Menu: Account ing → Controlling→ Profit Center Accounting → Master Data→ Profit Center → Collective Processing →

KE55 — Master Data

¡ Transact ion Code: KE55

2.11.2 Profit Center Groups

n In profit center accounting, you use profit center groups to use as a node in the standard hierarchy or to create an alternative hierarchy.Profit center groups provide the following advantages:

¡ Used for information systems to display reports for certain groups

¡ Used for allocation process to allocate dollars

¡ Used for your planning process

¡ Used to build two more alternative hierarchies for your controlling area. See Figure 2.100.

n You can create an infinite number of hierarchical profit center structures for information systems, allocation processes, and for planning.

You can create profit center groups by using the following navigation path:

¡ SAP Menu: Account ing → Controlling→ Profit Center Accounting → Master Data→ Profit Center Group → KCH1 — Create



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¡ Transact ion Code: KCH1


n Profit centers get their data through indirect and direct posting. Almost all cost and revenue data flows to the profit center accountingthrough indirect posting, such as when you post to a cost center and the profit center assigned to that cost center master data is populatedwith transactional data.

n Sometimes to prepare a balance sheet based on profit center, you post transactional data only to the posting center, described here asdirect posting. Direct posting are very minimal in profit center accounting. You can create profit center posting only through the followingnavigation options:

¡ SAP Menu: Accounting → Controlling→ Profit Center Accounting → Actual Postings→ Profit Center Document → Enter

¡ Transact ion Code: 9KE0

n In overhead accounting you use cost center, internal order, and projects to collect costs relevant to these objects. To flow these data toprofit center accounting, you need to assign profit centers to the master data of cost center, internal order, or projects. This assignmentensures that data captured in these components will flow to profit center accounting.

n In cost center master data, seen in Figure 2.101, SAP provides profit center fields to assign profit center. You can assign multiple costcenters to a profit center, but only one profit center can be assigned to a cost center. This is called a default assignment, which can beoverwritten by keying a new profit center while entering a transaction.

Figure 2.101: Profit center assignment to cost center.

n While making the previous assignment, the system ensures that the controlling area of the cost center is same as the profit centers.

n You use internal order to collect cost for specific projects and events. Like cost centers in internal order, you have to assign a profit center,as seen in Figure 2.102, in the same way you assign a profit center to a plant maintenance order.

n In product costing, you use the cost objects to collect costs that can’t be assigned to a cost center or internal order. In order to reconcilecontrolling with financial accounting, you need to assign profit centers to cost objects. In the cost object master data, you need to assign aprofit center, seen in Figure 2.103.



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Figure 2.102: Profit center assignment to internal order.

Figure 2.103: Profit center assignment to cost object.

n In profitability management, you use characteristics and value fields to determine the result of a profitability segment. You usecharacteristics to determine profitability segment such as materials, customers, and plant and distribution channels. One of thesecharacteristics will always be a profit center.

n You use a project for a complex task that involves multiple cost centers or internal orders, and a project involves multiple activities groupedunder a node. In order to have better tracking, you assign a profit center not to the project definition, but to project sub-components calledwork breakdown structure, network header, and network.

n When you assign a profit center to a project definition, the profit center assigned to project definition is defaulted unless a specific profitcenter is assigned to WBS element.

n To move internal goods for sales and production orders, you use material master. Material master forms the basis for derivation of profit

center. In material master, you assign a profit center.

n Depending on the material and business scenarios, you assign profit centers in different views of material. SAP has provided profit center



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assignment fields in different views of material master, such as storage two views, general plant view, and sales view. Even though youcan assign a profit center in different views you will always assign the same profit center.

n In the allocation tab of PP (Production Planning) production orders and process orders, SAP has provided a field to assign a profit center.Depending on order, the system proposes the profit center, which reduces manual intervention needed to assign profit centers. In the caseof PP, the production order system assigns a profit center from the material master general plant view of the material to be produced. Inthe case of process orders, the system proposes a profit center from the main product.

n When you allocate costs to a production order or process order, the system-assigned profit center gets posted from the production orderor process order.

n While settling the production order or process order, the system gives credit to the assigned profit center.

n In the case of sales orders, the system gets profit center from the material master of the order item.

n Some the default profit center assignments don’t suit the business requirements. In those cases you can opt for assignment of profit centerthrough substitution.

n To know the profit center assignment and derivation, SAP has provided a very useful tool called assignment monitor . Assignment monitoris a central point where you can see the profit center assignments of various objects. Through assignment monitor you can change and/ormake a new assignment. You can reach the assignment monitor screen by using either of the menu paths:

¡ SAP Menu: Accounting → Enterprise Controlling→ Profit Center Accounting → Master Data→ Assignment Monitor


Figure 2.104: Assignment monitor: not assigned cost centers.

n Figure 2.104 depicts the assignment monitor for cost centers that are not assigned to profit centers.

n From assignment monitor you can call up the cost center list, internal order list, or material list to see profit center assignment. If anycorrections are required, you can quickly navigate to change mode and make the necessary assignment.

n Normally, you post profit center accounting using the following data:

¡ All postings affecting primary cost elements and secondary cost elements

¡ Other income statement accounts directly assigned to profit center through the automatic account assignment, transactions related tomaterial management, and sales and distribution modules.

¡ Balance sheet items that were transferred

n In financial accounts, when you post to an income statement account for which a primary cost element exists, the system expects to assign



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a cost object. The cost object here can be either a cost center, internal order, or WBS element. Normally, you assign profit center to all ofthese cost objects so the profit center gets its profit when you post to these cost object. If there is no such default, the system expects toenter profit center while making financial transactions.

n In material management, you move material for different purposes. In some cases, these transactions cross profit centers associated withthe material concerned. These types of transactions are tracked in the general ledger through the account determination process.

n In the case of goods receipts and invoice receipts based on account assignment, the system creates a profit center posting.

n In the production process, you use the production order to capture the cost of a product. All materials issued in the production process arecaptured in the production order and profit center associated with the final, or main product. After completion of the production process,you settle the costs collected in the production order to the final product. In the settlement process, the system credits the profit centerassociated to the production order by debiting the profit center associated with the final product.

n You assign sales orders to a profit center, thus the profit center associated with sales passes the delivery note subsequently to the billingdocument. Thus, revenue associated with the billing document is posted to the profit center account.

n You post directly to the profit center in the case of not-integrated revenue, such as income from investment.

n By transferring balance sheet items as part of month-end activities, you can treat the profit center as the investment center. In this case, theperson in charge of the profit center is not only responsible for the generation of income, but also for the return on investment.

n When you transfer balance sheet items to a profit center, the system determines the profit center by:

¡

Material: In case of inventory value, the system determines profit center based on the profit center assignment to the material master

¡ Assets: In case of assets you are assigning to the cost center or internal order orders, the system derives the appropriate profit

center.

¡ Valuated sales order stock: The system derives the profit center from the respective profit center.

¡ Account Receivable: When you transfer account receivable balances, the system distributes the receivables between profit centers

based on profit and center assigned revenue line items.

¡ Accounts Payable: Accounts receivable are distributed among profit centers based on the profit center assignment to the material

that has been procured through the purchase order.

¡ Down Payments: Customer or vendor down payments are not always specific to a purchase order or sales order. In the absence of

a proper relation, the system cannot determine the appropriate profit center. In these circumstances, the system allows you tomanually assign the correct profit centers.

n To transfer a balance sheet item, you need to configure the SAP application so that you can initiate the transfer of balance sheets items toprofit center accounting manually or through batch processing. In the configuration steps, you need to determine which balance sheetaccounts you want to transfer to which profit centers. You can reach the configuration screen by using the following menu path:

¡ SAP IMG Menu: Controlling→ Profit Center Accounting → Actual Postings → Choose Additional Balance Sheet and P&L

Accounts→ Choose Accounts



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Figure 2.105: Balance sheet accounts.

n In addition to the system’s derivation rule, you can build your own rule to derive a profit center based on a certain field value. You can reachthe configuration screen by using the following menu path:

¡ SAP IMG Menu: Controlling→ Profit Center Accounting → Actual Postings → Choose Additional Balance Sheet and P&L

Accounts→ Derivation Rules for Finding the Profit Center

Figure 2.106: Profit center derivation rule.

n Once you have determined the balance sheet G/L account to be transferred and have set the derivation rules, you can transfer the openingbalance of balance sheet items to profit center accounting. This is a one time activity. You can reach the opening balance transferfunctionality by using the following navigating menu path:

¡ SAP IMG Menu: Controlling→ Profit Center Accounting → Actual Postings → Transferring Selected Balance Sheet Items →

…………… Generate Opening Balance for Material Stocks

…………‥

Generate Opening Balance for Work in Process

…………‥

Generate Opening Balance for Assets

…………‥

Generate Opening Balance for Payables and Receivables

……….…‥

Perform Account Control for Valuation Differences

n Periodically, the system updates profit center accounting with financial data once you have updated the profit center accounting with theopen figure. The system performs a delta or incremental data load on each update.

n You can manually transfer financial data to profit center accounting, but be sure to make note of it. Per the SAP design, the system will firstdelete data that were already transferred to a profit center account and then load manual data.

n During the year-end activities, you need to carry forward profit center accounting balances to the next year. You can perform balance carryforward by using the following navigating menu paths:



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¡ SAP Menu: Accounting → Controlling→ Profit Center Accounting → Actual Postings→ Period-End Closing→ Balance Carry

Forward

¡ Transact ion Code: 2KES

n In controlling, you use the allocation process to move balances between cost objects. During the allocation process, the system createstransactions, which are posted to profit centers based on the profit centers assignment to the cost objects, such as cost centers, internalorders, or WBS elements. The system uses the primary cost element or the secondary cost elements to capture these data.

n Like cost center accounting and internal order, in profit center accounting you can perform the allocation process. Normally, you adopt theallocation process in the profit center account where you initially collected. In some circumstances, transactions in one profit center need tobe distributed among various profit centers:

¡ When you are maintaining profit centers as service profit centers

¡ Transferred assets or material that, due to account assignment, are posted to one profit center and need to be distributed amongother profit centers.

n Profit center accounting doesn’t support reporting. In the allocation process, you use profit center distribution or assessment. Profit centerdistribution or assessment follows the same processes as cost center accounting.

n Like cost center accounting, in profit center accounting you can assess or distribute profit center data based on either percentage,specific amount, or Statistical Key Figure (SKF).

n If you are planning to use statistical key figures that you are using in a cost center accounting, you can transfer those key figures into profitcenter accounting.

n Profit center accounting also facilitates entering external data that are not available in SAP application. You can profit center documententry functionality by using the following menu path:

¡ SAP Menu: Accounting → Controlling→ Profit Center Accounting → Actual Postings→ Profit Center Document → Enter


n In profit center accounting, all data that are transferred from external system or created in real-time are stored in average balance ledger8Z. Typically, balance ledger amounts are stored based on their average periodical weight. If the translations are updated in profit centeraccount periodically, the system stores the end balance but not the day to day transactions.

2.11.4 Planning in Profit Center Accounting

n Profit center planning normally starts once overhead accounting planning data is complete.

n SAP has provided tools to plan profit center accounts by adopting different methods. These tools include: cop existing plan and/or actualdata to a new set of plan data, post plan by transactions, manually plan profit centers, and distribute and assess profit centers.

n The data container of planning data is versions. You can maintain different versions for different sets of planning data.

n In SAP, plan version is valid for all CO modules, but the usage of plan version in specific applications requires maintenance of additionalparameters.

n SAP has provided a different set of reports, through which you can compare different planning versions and/or actual data.

n Due to the integrated approach of the ERP application, you can transfer planning data of other components of SAP application to profitcenter accounting. To transfer data from other components, you need to maintain necessary control parameters for profit centeraccounting.

n In order to protect plan data from further unintended modification, you can lock the planning version by setting the lock indicator.

n In a profit center account, you can transfer profit center planning data either in real-time or through a batch process. If you want to transferdata in real-time, then you need to set the online data transfer indicator as active, otherwise you need to transfer planning data fiscal year.

n To enter manual planning data, you use planning layout. To enter data, you can use the SAP-provided planning layout or you can createyour own layout. You can reach the planning layout configuration screen by using the following menu path:

¡ SAP IMG Menu: Controlling→ Profit Center Accounting → Planning → Manual Planning → Planning Layout

…………‥

Maintain Planning Layout for Costs/Revenues

…………‥

Maintain Planning Layout for Balance Sheet Accounts

…………

‥

Maintain Planning Layout for Statistical Key Figures

n Planning layout helps in many ways, such as:



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¡ You can plan in any currency

¡ You can create a formula to derive a figure for specific rows or columns

¡ You can plan for more than one column

¡ You can plan for any period dimensions, like monthly, quarterly, half yearly, or yearly

n Like the actual allocation process, you can allocate plan data in profit center accounting. Once you have completed planning in the profit

center, you can use the allocation process (plan distribution and plan assessment) in profit center accounting to transfer data from one ormore profit centers to one or more profit centers.


n In profit center accounting, SAP has provided many of box reports you can use for your analysis purposes. In addition to standard reports,you can build reports as per your requirements with report painter/report writer and drilldown.

n For profit center accounting, SAP comes with libraries 8A2, 8A3, and 8A4. You can find all standard reports and report groups underthese standard libraries. You can reach these standard reports by navigating the following menu path:

¡ SAP Menu: Accounting → Controlling→ Profit Center Accounting → Information System………‥

(various reports)

n When you call up line item reports, the system accesses line items from the total table GLPCA. Similarly, profit center planning reports canaccess planning data from GLPCP.

Answers

Answers

Like profit center accounts, SAP has provided another profitability measurement tool called profitability analysis (CO-PA). In the next section,you will come to understand various aspect of profitability management. CO-PA is a very useful tool in the hands of management to measurethe performance of a segment.

2.12 Profitability Analysis (SAP ® CO-PA)

Today’s business is not concentrated in any one region, country, or continent. Due to competition and such large accessibility to markets,management always needs a good analysis tool for better control and for margin analysis.

To stay top on of the market, sales departments make every effort to concentrate on product, geography, and customer. This can be done ifthe sales department is equipped with updated and reliable data.

All this requires a good and flexible tool that gives timely reports to facilitate decision making. SAP controlling profitability analysis provides allthe information to make an informed decision.

There are a number of things that all companies want to use profitability analysis for, such as to generate a report by products, customers, andgeography called a segment. Some of the segments come with pre-delivered mySAP ERP Financials, while others can be customized as peryour business requirement.

In this section, you will come across key concepts such as of profitability analysis and configuration guidance, as well as questions andanswers.

n Profitability analysis is tool that helps to evaluate a market segment. You can classify market segments by product, geography, customer,or any combination of a strategic business unit. The main objective of CO-PA is to provide information to marketing, sales, and corporateplanners for decision making.

55 Question – 55

In classic profit center accounting, every posting to profit center accounting is a statistical posting .

A. False

B. True

?

55 B

56 Question – 56

SAP has provided _____________________ to see assignments of profit centers to various SAP objects.

?

56 assignment monitor



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n The results of profitability analysis can be analyzed with a multi-dimensional reporting tool, which provides slice and dice functionality.

n The SAP application provides two forms of profitability analysis: costing-based profitability analysis and account-based profitabilityanalysis.

n Costing-based profitability analysis: In costing-based profitability analysis, costs and revenues are grouped together based on sale ofproduct and services. This form of profitability analysis emphasizes matching revenues generated from sale of product and services withthe expenses incurred to generate these revenues.

n Account-based profitability analysis: Account-based profitability analysis system captures data according to the account posted. In thisform of profitability analysis, the system summarizes situation changes over the period of time.

n Table 2.3 describes the differences between cost-based CO-PA and account-based CO-PA.

2.12.1 Operating Concern

n The operating concern is the highest reporting level in COPA. An operating concern consists of at least one controlling area, however, youcan assign more than one controlling area to an operating concern.

n You can create an operating concern through either:

¡ mySA P ERP IMG Menu: Implementation Guide (IMG) → Controlling→ Profitability Analysis → Structures→ Define OperatingConcern→ Maintain Operating Concern

2.12.2 Characteristics

n In CO-PA, characteristics are used for analysis dimension such as customer, product, and sales organization. In CO-PA, you will comeacross two types of characteristics: fixed characteristics and non-fixed characteristics.

n Fixed characteristics are pre-delivered characteristics and available for use by all operating concerns in a client.

n Non-fixed characteristics are user-defined characteristics. We can classify these non-fixed characteristics based on how they arecreated. Characteristics are used both in costing-based CO-PA and account-based CO-PA

¡ Created with reference to reference tables: You can create characteristics with reference to customer master records, material

master records, and sales documents.

¡ Created from scratch: These types of characteristics are used especially in CO-PA and are customer specific. For example, you cancreate characteristics like continents.

¡ Predefined characteristics: In addition to fixed characteristics, SAP comes with a few pre-delivered characteristics.

n You need to add all non-fixed characteristics to the field catalog before you use them in the operating concern. In order to carrycharacteristic values, each characteristic uses a check table.

n To create or maintain characteristics fields follow either:

¡ mySA P ERP IMG Menu: Implementation Guide (IMG) → Controlling→ Profitability Analysis → Structures→ Define Operating

Concern→ Maintain Characteristics

2.12.3 Value Fieldsn In costing-based CO-PA, value fields store the quantities and amounts for analysis. The value fields can be either highly summarized or

Table 2.3: Costing-Based COPA vs Account-Based COPA

Costing Based CO-PA Account Based CO-PA

Currencies: You can store transactions

– Company code currency – Transaction currency

– Operating Currency – Company code currency

– Controlling area currency

– Transactions are stored in COPA special table, and thus

does not burden CO tables

– Transactions are posted into CO tables and systems creates separate line items for COPA

postings (COEP, COEJ, COSP, COSS)

– Need reconciliation to reconcile COPA with financial data at

particular point of time

– COPA is reconciled with financial accounting.

– Quantity and amount are stored in value field with reference a

characteristics

– Amounts are stored in general ledgers.



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highly detailed.

n Like non-fixed characteristics, you need to add value fields to the fields catalog before you use them in an operating concern. You canaccess value fields from the fields catalog from any client in a system.

n SAP provides a few suggested value fields in the field catalog that can be used in the new operating concern. You can also add customvalue fields to the field catalogue. As per SAP’s best practice, you can create custom value fields starting with VV and they should be fivecharacters long.

n You use value fields to retain various posted values, not the calculated values. While executing CO-PA reports, the system calculates fieldslike net sales, gross sales, and profit margins.

n To create or maintain value fields follow either:

¡ mySA P ERP IMG Menu: Implementation Guide (IMG) → Controlling→ Profitability Analysis → Structures→ Define Operating

Concern→ Maintain Value Fields

n In account-based CO-PA, all values are updated to accounts and transactions are recorded in up to three currencies under fixed basic keyfigures. You use fixed basic key figures for reporting purpose.

n In order to get started with CO-PA configuration, you need to structure the operating concern. Structuring an operating concern involvesfollowing steps:

¡ Select characteristics to be used. You can select only those characteristics that are available in fields catalog.

¡ Select value fields to be used. You can select only those value fields that are available in fields catalog.

¡ Select attributes of the operating concern. Attributes of an operating concern consist of the definition of currency type, fiscal yearvariant, and types of CO-PA. (Figure 2.108)

n Currency Types: mySAP ERP Financials allows you to capture transactional data: in case of costing based CO-PA (the system alwaysupdates in operating concern currency and you can store data in company code currency) and in an account-based CO-PA where you canstore data in three currencies (transaction, company code, and controlling area).

n Capturing data in company code currency makes sense when your operating concern consists of multiple company codes using differentlocal currency.

n While structuring the operating concern, you need to assign fiscal year. The fiscal year you assign to the operating concern must agreewith the controlling area and company code in respect to normal posting periods.

n Account-based CO-PA and costing-based CO-PA: Both of these methods have their advantages and disadvantages. While structuringan operating concern, you need to decide what your options would be. However, you can choose both options if you want.

n Once you have decided your operating concern structure, you need to generate an operating concern environment. The operating concerngeneration program builds operating concern tables, programs, and data dictionary.

n Costing-based CO-PA stores transaction data in its own separate table. When you generate an operating concern, the system generatesthese tables. Due to the separate sets of tables, costing-based CO-PA doesn’t overload other standard tables and gives faster executionspeeds of CO-PA reports.

n Figure 2.107 and Figure 2.108 depict operating concern attributes of operating concern IDEA. Figure 2.107 shows types of COPAactivated for operating concern IDEA, while Figure 2.108 depicts attributes of operating concern IDEA.

n Costing-based CO-PA uses the following specific CO-PA tables:

¡

CE1XXXX Actual line items, where XXXX is operating concern ID¡ CE2XXXX Plan line items



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Figure 2.107: Operating concern: activation of type of COPA.

Figure 2.108: Operating concern attributes.

¡ CE3XXX Summary records by profitability segments

¡ CE4XXXX Profitability segment definition

n In account-based CO-PA, transaction data are stored in the controlling overhead tables. As overhead tables are being shared byoverhead accounting and by profitability analysis, it affects the execution speed of reports.

n While generating operating concern, the system generates CE4XXXX tables for account-based profitability analysis.



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n Account-based profitability analysis uses the following tables:

¡ COEJ Actual line items

¡ COEP Plan line items

¡ COSS / COSP Summary records by profitability segments

¡ CE4XXXX Profitability segment definition

n Both costing-based profitability analysis and account-based profitability analysis uses the same CE4XXXX segment definition table whileposting transaction data.

n CE3XXXX table store summarized transactional data. While executing the profitability report, the system access CE3XXXX andCE4XXXX tables.


n Not all transactional data are posted to profitability analysis. Only relevant data are posted to profitability analysis, which is determinedthrough automatic and manual mapping, and through derivation and valuation configuration.

n Automatic derivation happens when automatic data transfer happens from other modules, such as:

¡ Billing document

¡ Transfer of overhead

¡ External data transfer

n The other type of derivation is manual derivation. These types of data generally generate in FICO modules. For example:

¡ Settling orders and projects

¡ Direct posting from FI

¡ Manually created COPA line items;

¡ Manually entry of planning data

n In contrast to automatic and manual derivation, another frequently used type of derivation is called derivation strategy. Derivation strategy

is generally used for user-defined characteristics.

2.12.5 Characteristic Derivation

n Characteristic derivation consists of derivation steps (derivation strategy). The purpose of characteristic derivation is to derivecharacteristic from the profitability analysis related transactions.

n When you generate an operating concern, the system generates standard derivation rules. The standard derivation rules include:

¡ Steps for deriving fixed characteristics

¡ Steps for deriving the characteristics you selected from SAP tables

¡ Steps for determining units of measures for the quantity fields assigned in the sales and distribution application, or in planning

n If you have created user-defined characteristics, you need to define your own derivation logic.

n Each derivation consists of the definition of the logical inter relationship between the known source characteristics and characteristics tobe derived. Through the derivation process, one or more characteristic values are derived from one or more source fields.

n To locate characteristic values for all profitability analysis, the system goes through a number of derivation steps. This sequentialderivation step is called derivation strategy.

n In customization, you define the sequence of derivation steps, through which the system locates characteristics values. In each derivationsteps, you configure:

¡ Under what circumstances the steps should be executed

¡ Whether initial values are allowed for source fields in a step

¡ Whether the step should be overwrite an existing characteristics value

¡ Whether an error message should generate if the step is unsuccessful



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2.12.6 Derivation Type

n While generating an operating concern, the system also generates standard derivation steps to derive characteristic values of all knowncharacteristics and dependencies.

n You can change the system generated derivation steps and add your own derivation steps in a logical way to make chains of derivationsteps. However, derivation of controlling area, product, company code, and customer are non-modifiable.

n SAP ERP Financials provides different derivation type to derive characteristics in a different way depending on dependencies, sources,and target fields.

n There are: derivation rule, table lookups, moves, customer hierarchy, and customer enhancement.

n Derivation rule: Derivation rules are used to derive characteristic values through user defined logic. A derivation rule determines whichsource characteristics or combination of characteristic values results target characteristic values. The rule is used mostly to derivecharacteristic values for user-defined characteristics. You can configure derivation rules for a specific time period.

n Table lookup: Table lookup is another method through which you can derive characteristics from other known characteristics. You need toevaluate sales performance by country, so by using table lookup to the customer can derive country where the sales have occurred.

n When you are generating an operating concern system, the system builds a few table lookups. However, you can change them and createyour own table lookups.

n Move and Clear : This derivation type helps move whole or part of a characteristic, as well as clear one or more characteristics from the

transactions.

n You can reach the configuration screen to create derivation rule by navigating the following menu paths:

¡ mySA P ERP IMG Menu: Implementation Guide (IMG) → Controlling→ Profitability Analysis → Master Data→ Define

Characteristic Derivation

2.12.7 Data Feed to COPA

n Data flow to COPA depending on the type of COPA you are using and the modules you are using. In this section, you will come to knowhow and from where COPA gets its data to generate segmental reports.

n Data Feed from Sales and Distribution Module: Quantities, revenue, discounts, and the cost of goods sold are transferred to COPA,where you generate billing document in SD module in the case of a costing-based COPA. In the case of an account-based COPA, thesystem updates COPA with the cost of goods sold information when you create outbound delivery, revenue, and discounts when you

create billing documents.

n Data Feed from Overhead Accounting : Overhead cost not relevant to production collected in cost centers is allocated to profitabilitysegments through assessment. In the assessment process, sending cost centers are created with cost that are being sent and debited toreceiving cost centers. The cost center assessment to COPA works in the same way as it works within overhead accounting. You need todefine the cycle and segment to assess cost centers to COPA.

n In overhead accounting, you use internal order, sales orders, and plant maintenance order, to collect cost for specific purposes. Aftercompletion of a project you can settle these costs either to another cost objects or directly to COPA profitability segments.

n In account-based COPA, the costs are settled through the settlement cost element specified in settlement structure.

n In costing-based COPA, the costs are settled using the original cost elements to value field specified in transfer structure.

n In COPA, you use allocation structure and PA transfer structure for the settlement of internal orders and assessment of cost centers.

n Allocation structure consists of one or more settlement assignments. A allocation structure consists of the type of cost (cost elements orgroups of cost element) that needs to be allocated with which received type (cost centers and COPA segments).

¡ mySA P ERP IMG Menu: Implementation Guide (IMG) → Controlling→ Cost Center Accounting→ Actual Postings → Period-

End Closing→ Assessment Define→ Allocation Structures

n A PA transfer structure consists of assignments of costs and revenues to the value fields in costing-based COPA. You use a PA transferstructure in order settlement, FI direct posting, and internal activity allocation in CO. You can create a PA transfer structure by using thefollowing navigation path:

¡ mySA P ERP IMG Menu: Implementation Guide (IMG) → Controlling→ Profitability Analysis → Flows of Actual Values→ Order

and Project Settlement→ Define PA Transfer Structure for Settlement

n Data feed from FI : Expanses and incomes that are not related to overhead, material management, sales, and distribution can be posted

directly to COPA from financial accounting. A couple of examples of these types of costs are advertisement and insurance fees.

n While making a financial accounting transaction in a costing-based COPA, you can directly assign transaction to characteristics by calling



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a special screen layout. In the case of an account-based COPA, data are posted to the same cost and revenue elements.

n Production variances: When you are receiving material from the production process, if any price variances arise, these price variancesare settled to profitability segments.

n Data-feed through valuations: Some expenses, such as freight expenses and sales-sensitive elements, will not be available until theyhave incurred. In order to determine fair profitability segmental result, SAP has provided functionality called valuation. Through valuation,you can calculate tentative figures for supplemental expenses.

n You can calculate supplemental expenses by using one or more of the following techniques:

¡ With the help of costing sheet

¡ By mapping the product cost component technique to value fields

¡ By using an existing user

n With the help of a costing sheet, you can calculate supplemental costs that can ’t be determined right away. A cost sheet is a structuralpresentation of calculation and uses SAP’s famous condition technique to calculate supplemental figure.

n You can reach the configuration of a costing sheet by using the following navigation path:

¡ mySA P ERP IMG Menu: Implementation Guide (IMG) → Controlling→ Profitability Analysis → Master Data→ Valuation→

Create Condition Types and Costing Sheet

n A costing sheet consists of sets of condition types. Each condition type has access to either a value or calculation. In COPA, eachcondition type mapped to value field.

n A product costing module is used to estimate the cost of a material. You can view cost estimates in different views like by item, costelement, or cost component.

n Through configuration, you are assigning cost components to value fields. When you do valuation, the system transfers cost estimationinformation to COPA through cost components.

n With the help of value field analysis you can find out how transactional data flows to SAP COPA. You can reach value field analysisfunctionalities by navigating the following menu path:

¡ mySAP Menu: Accounting → Controlling→ Profitability Analysis → Tools → Analyze Value Flows →……. Various

n Value field analysis depicts the value flows:

¡ Transfer of billing documents and sales order from sales and distribution module

¡ Direct posting from financial accounting

¡ Direct posting from material management module

¡ Settlement of internal orders and projects

¡ Overhead assessment from cost center accounting

¡ External data transfer


n SAP has provided an interactive reporting functionality for COPA called drilldown reporting. In drilldown reporting, you can generatereports for a reporting characteristic or group of characteristics.

n The functions of drilldown reporting is divided into three levels based on functionalities:

¡ Level 1: Contains basic functions of drilldown reporting. Report allows you to send output through SAPmail.

¡ Level 2 : Contains the rest of the features of drill down reporting, allows the user to download data, and displays reports in graph.

¡ Level 3: All level offers all functionalities of drilldown reporting

n COPA drilldown reports are either basic reports or form reports.

n Basic Reports: Basic reports are designed and built based on a predefined basic structure.

n You can build a basis report either from the IMG menu or from the application menu. While creating basic reports, the system expects youto key the "from" and "to" dates, in case of costing based COPA record types, versions, plan, or actual indicator.

n If you have created characteristic hierarchies, you can use them in the basic reports.



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n Form Reports: These types are more complex and designed for specific-user requirements.

n In form reports, form determines content and structure of the report. The content of the form is generally fixed but you can change form inspecial circumstances.

n Basic reports and form reports are valid for one type of COPA. For example, if report X is designed for costing based COPA, it can ’t beused for account based COPA.

Answers

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Answers

Answers

Answers

57 Question – 57

In COPA, SAP comes with pre-delivered characteristics, company code, purchase organization, sales organization, and

materials, and predefined automatically for every operating concern. These are known as _____________________.

?

57 fixed characteristics

58 Question – 58

When you post data to a costing-based COPA, the system updates transactional in special COPA tables.

A. True

B. False

?

58 True

59 Question – 59

Like other modules, in controlling profitability analysis, system uses _______________ as highest-level entity .

A. Operating concern

B. Plant

C. Controlling area

D. Company code

?

59 operating concern

60 Question – 60

In account-based profitability analysis, the system updates and stores the actual transactions in the company code

currency .

A. True

B. False

?

60 True

61 Question – 61

In account-based profitability analysis, ________________store the amounts for reporting .

?

61 accounts




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A derivation strategy consists of a number of derivation steps, which derive different _______________________.

62 characteristics
